...but on the other hand I want to give exceptional candidates a chance to stand out.
This reminds me of an assessment technique I faced in high school once. A teacher from another school would come to the student and begin asking questions. At first, they were simple, and they'd gradually become more difficult. Once the teacher found the student's limit, the teacher would walk the questions back again. From the student's perspective, only one or two questions were too hard to answer, and they got to finish well. I could see using this method for technical assessment, but I'd have to have more questions available than I'd normally use.
I've had the "write code that does..." questions in interviews, and I've enjoyed them. I really like the code review method that you present also.
Thanks for your comments.