I largely agree, but I have had one experience that opens a tiny bit of wiggle room for such assignments. During a phone interview with hiring manager, he asked me if I had experience with X, Y, or Z open source projects (all relevant to the team). I told him that I did not, but that I'm always eager to learn new things. He asked me to pick one of them and 'build something' that uses it (no more specific than that). I instantly recoiled at the idea, but I didn't verbalize it. I went along with it. I decided to take the 'when given a lemon...' point of view and build something that was of interest to me.

A few weeks later I came onsite for in-person interview. I brought up the assignment and was able to use it to show my interest and capability of quickly learning and putting something to use. I really believe it worked to my advantage.

If the assignment were to implement something very specific I would not have done it. In my case the assignment was so completely open-ended and was able to convince myself that it wasn't a 'work for free' situation.