No, I didn't mean these questions should be asked by the interviewer. I meant that the candidate should make these decisions alone and be able to reason why did they go either way.
I agree though, it's about string manipulation, but if someone can't choose the best approach here, they probably wouldn't choose the best approach where working with strings is just a minuscule part of the problem.
There are also ways to go nuts with this question, like "reverse 100GB String that doesn't fit in memory and you can only read sequentially forward".
Which (type of) problem do you think is a better question for a face to face coding exercise? Btw, I still think this problem has it's place, for example for junior devs or just a quicky among many other questions.