The idea behind an interview is to understand how proficient you are in articulating your thoughts, and how well you can handle difficult problems. No good interview asks only simple questions. The hard ones are there for the interviewer to understand how experienced one is in handling newer situations, and how he/she performs in a "virtual" stressful situation. Its not a litmus test, but probably the best an interviewer can do in 60 mins. These skills only come by practice, and if school can help accelerate it -- that's great!

My only concern is that for introductory courses, programming must be a "fun-only" affair -- let students explore, crash and burn the computer rather than worry about small details.