Not just that you know how to look things up, but that you know something exists so you can look it up. For example, regular expressions. Or hash functions. Or the many, many tree structures.

The "with a bit of effort" portion is key, and from what I've seen more people will not go back and fill in the gaps in their skills (or at least well). Industry experience is also very valuable, but will rarely cover the same ground as someone with a formal education and a couple years experience.

In my experience, the culture shock for new grads wears off in about 6 months to a year. Either they get with the program and start doing the work real-world right or they find a way to disappear into a giant corporate environment. Those that get with the program quickly become more valuable than self-taught programmers who don't understand the fundamentals well.

You eliminate a lot of possibility of gaming the system by making the tests standardized, graded by a machine, and having basic cheat avoidance like multiple versions of a test. But yes there is certainly a way to do this very badly.

The iPhone uses something special for YouTube. Still, I would expect full Flash support for the iPhone Safari browser before Linux, because Apple can definitely lean on Adobe if they feel a need for it.