Oral would suck for the transition students. It's a completely different style and skill set of answering questions and no kid would have training or the mental framework on how to do it. It's great if you're the kind of person who can write a mostly perfect draft essay from start to finish no skipping around or back tracking, but if that's not you, it's gonna be a rough learning curve. This is before we ask questions like how does a deaf person take this exam? A mute person? Someone with verbal paraphasia?

You are not wrong. I think the best use of this would be a verification test that had significant impact on your grade but didn't necessarily fail you if you did well in other evaluations.

Think of it as a conversation like a job interview that takes into account the different ways people react in that environment. I do this when I'm interviewing job candidates. I interview people for technical jobs. I value good communicators but if that's the only people I hired, I wouldn't have as good a team. But if I do hire someone who isn't as good as this, I coach them. They get more comfortable. I realize some people have anxiety or other things that make this very difficult, I think that could be taken into account (e.g. more written work but in an observed setting).