I've had colleagues argue (prior to LLMs) that oral exams are superior to paper exams, for diagnosing understanding. I don't know how to validate that statement, but if the assumption is true than there is merit to finding a way to scale them. Not saying this is it, but I wouldn't say that it's fair to just dismiss oral exams entirely.
I think oral exam where you have a student explain and ask questions on a project they did is really good for judging understanding. The ones where you are supposed to memorise the answers to 15 questions where you will have to pick one at random, not as much imo.
Yes, I hate oral exams, but they are definitely better at getting a whole picture of a person's understanding of topics. A lot of specialty boards in medicine do this. To me, the two issues are that it requires an experienced, knowledgeable, and empathetic examiner, who is able to probe the examinee about areas they seem to be struggling in, and paradoxically, its strength is in the fact that it is subjective. The examiner may have set questions, but how the examinee answers the questions and the follow-up questions are what differentiate it from a written exam. If the examiner is just the equivalent of a customer service representative and is strictly following a tree of questions, it loses its value.
Universities are not just places for students to learn. They are also places where young faculty, grad students and teaching assistants learn to become teachers and mentors. Those are very difficult skills to learn, and slogging through a lot of hands on teaching and mentoring is necessary to learn them. You can't really become a good classroom teacher either without grading your students yourself and figuring out what they learned and didn't.
Seems like the equivalent of claiming white board coding is the best way to evaluate software development candidates. With all the same advantages and disadvantages.