Yes. Though in practice I'd give people some grace period after the three hours: the three hour time limit is to help the candidate not commit endless hours to the project, it's not meant as a punishment.
I agree here - given the pressures of an interview are much higher than on the job, enforcing a time limit should only prevent extremes rather than add yet more pressure.
I think I’d be fine if someone gave me 3 hours to complete a typical take home exercise, but I worry that some exceptional engineers I know might not be. Applying excessive time pressure could lead to cultural homogeneity.
