The way you describe your ideal interview is how I conducted leet code style interviews. Ask a problem with a simple algorithm and then ask extensions until the time ran out. This worked pretty well.

For interviews where candidates are using AI I think you can supercharge this approach, but I do not think there is value in turning it into a code navigation puzzle as there is little value in that can be evaluated in the ~45 min you have for coding in a 1 hr interview slot. Ultimately in many software engineering jobs these days we need to understand how to build quality systems without looking into the underlying system except as necessary. I am not sure how to best evaluate this judgement in an AI assisted interview