On the one hand, I agree that video testing is limited compared to in-person testing in that the instructor can't change angles, get close, or go hands on with a student to feel his/her energy.
On the other hand, video does allow the instructor to pause, zoom and rewind the action to watch for fine details. Furthermore, I've seen plenty of tests at various schools where the instructor just sat in a chair on the side of the room to watch the student testing, with no better view than would be provided by a video camera.
Personally, I prefer the system I've experienced in BJJ*. Promotions are based on the instructor's day-to-day observations and interactions with the student over the course of months and years rather than performance on a single test.
*(This is my own experience in the schools where I've trained. I know that some BJJ schools do have formal tests for promotion.)