As an employer yourself, would you be willing to sign-off on that if that meant you might eventually lose him as a result? Actually, don't answer that. Even if you agree to that, because you're a reasonable manager, a better question would be, do you think your HR department and legal in-house counsel (assuming your company is big enough to have those) would agree to something like that with an existing employee (when unlike you, they don't have a relationship with the employee in question, they probably don't even know him all that well, except for the fact that he's probably a valuable employee and that it may cost the company money down the road if they were to agree to such an exclusion)??
I'll be frank - but these are my opinions only.
Yes I would employ them with those caveats in place (and yes signoff can be sought from the other depts involved) - but I do see that as the employee saying "I'll work for you, but only until something else comes along" and to be honest that is a negative. If an employee is borderline at the hiring stage, this would not count in their favour for being hired.
We want people to be committed to us and for us to be their career, for as long as they choose to remain with us. The perception this gives is that they can/will leave at any time, and while they are with us they won't put in the effort to make it work anyway because they'll also be focusing on their home projects. Some people can make this work, keep the two separate and still give 100% in the day job. Many can't.
probably a valuable employee
This is the key bit. On hiring them it is very "probably". Taking on someone new is a risk for the employer as much as it is a big step for the employee, especially for small business.
The honesty of being clear that they want to do side projects is appreciated (and important!), but to be frank it is a negative. Sorry.
You may also be right that many employers probably wouldn't...I can only speak from my experience.