A Transport Canada/FAA style oral is indeed how we are going to conduct our KSA 100, although much of the assessment will be in timely submission of paperwork etc. It is an initiative for large schools who have exposure to students over longer periods, in my opinion largely a waste of time in its current format - in fact we encourage our students to be anti-authority, which was a vast source of amusement to the rest of the attendees when I mentioned it at the last KSA meeting I went to in EASA. In essence, as it is a school opinion, you could still not get your licence by being an @rsehole. Naturally, it opens up a vast legal minefield, as many schools don't have the expertise to judge whether a candidate would be a good pilot or not, especially with the minimum 65 hours exposure at consolidation. No problem here, as I am a CRMI, but our certification will only state that candidates are suitable for further training, not whether they are either competent of unlikely to crash into a mountain from a great height.
In my opinion the State's job is to ensure that pilots have a safe level of knowledge on which to build future experience - if the airlines want a particular type of candidate, they should sort it out - they are not the only game in town. With the current activity around question banks (which is needed to pass the exams) EASA have ensured that a good proportion of licence holders are no better than the 40% of PIA pilots whose licences are suspect.