I have passed a bunch of job interviews in the past - but I feel the exact same away and hire this way these days. I really do not see the point of brainteasers or white board coding questions if you have a budget where you can just pay out a contract like this. Also, I believe there was an article posted here a few weeks back that indicated Google's brainteasers did not lead to quality candidates - I know I am cherr…
I guess I do not see how you can lose if you take the contract-to-hire approach I agree with most of what you said, but one way you can lose if you insist on contract-to-hire is that you are filtering out a portion of the highest quality candidates who are only interested in immediate full time hiring.
if you're not able to easily spot such a candidate without attempting to make him/her to jump through the gimmicks (brainteasers, contract-to-hire, etc..) - well, it indicates the issue with your company and hiring practices in particular are deeper than just what gimmicks to apply.