Knowledge of folklore is not an accurate judge of a person's ability by any means. You are effectively ruling out anyone who learned to program in a language other than English, for instance.
But even if English is the language they learned to program in, expecting them to have read the same books as you is silly. There are so many programming books out that there that it boggles the mind to pick any one and expect them to have read it. Worse, to have read it and memorized every algorithm in it.
Programming is about completing tasks, not about memorizing everything in existence.
And this is coming from someone who finds memorization very, very easy, especially when the data to memorize is an algorithm.
It's an extra filtering mechanism for people who think they can afford to be picky.
I don't think it's meant to be universally applicable.
I'm only situationally in favor of this kind of thing, and I'd rather be a footnote/tilt factor than an actual bannable issue in a hiring process.
I've got a cursory familiarity with unix/hacker culture, but I don't think I would pass a Google-interview-esque history lesson even if I was able to ace that programming language test that went around earlier this week.
Edit:
I think it's worth mentioning here that there are no accurate methods of measuring competency in programming save for actually battle-testing them.
But even if English is the language they learned to program in, expecting them to have read the same books as you is silly. There are so many programming books out that there that it boggles the mind to pick any one and expect them to have read it. Worse, to have read it and memorized every algorithm in it.
Programming is about completing tasks, not about memorizing everything in existence.
And this is coming from someone who finds memorization very, very easy, especially when the data to memorize is an algorithm.