So I agreed with you until I talked to Gayle Lackman. There's a thread on quora somewhere where I asked her the question whether or not there exists engineers with a lot of experience who are not smart enough to ever work at google no matter how much they study?
Her answer was yes. She went on to elaborate that google hires and targets CS knowledge along with Innate General Intelligence.
Straight from the horses mouth as she was part of the hiring committee. I would source this thread unfortunately I can't find it anymore.
If you don't believe me you can always direct a question towards Gayle on Quora as she's an active user.
I think the truth is somewhere in the middle. I think in the higher echelons of google, they are actually trying to hire for higher IQ. What actually happens is different. The filters actually allow people who study to slip through the cracks despite how much they try. In general though, the overall group that gets hired at google is still generally smarter than a typical programmer working for a much less famous company.
Also as with every job, performance on the interview is highly uncorrelated from performance on the job, unless google has the big data numbers to prove otherwise.