I think Matt Smith hit on a good point.
I've been on both sides of the audition process numerous times, and overall, what a waste of time!
I get that 20 years ago, we had no choice. All you can do is interview someone over the phone, and then if you get a vibe, meet up in person, maybe you jam, or maybe it's just listen to a tape. But the tapes were always awful, because no one had access to decent recording gear without spending a ton of money. And 90% of the time, meeting someone in person was a totally different experience than what you expected based on the phone conversation.
These days, everyone can have a website/myspace/whatever page you can go check out their pictures, hear their playing, and get a decent sense of their musicianship. From there, I think the next part is just seeing if their is some chemistry, and is this the person you want to spent a lot of time with. Much like a date, it doesn't have to be perfect experience, but is their a spark.
I think too many people focus on well does so-and-so play the songs 100% correctly the first time. Which, I get if it's a name artist, and they just had Josh Freese or whomever do their album, and now they need a drummer to replicate the parts for the tour, but those people are paying for that perfection, and it's more of a job than a band.
But in most cases, you should know the person can play based on what you've seen. You know they'll get it, be it rehearsal # 1 or #3, the focus should be on is this the person you want to be gigging with, not if they nailed every single note cold. Don't get me wrong, I'm not saying who cares is they show up unprepared, or don't know any of the songs, just some people seem to ignore every other factor in favor of perfection.
I remember one band I was in (pre-internet era) we needed a bass player, and after the 1st few auditions, I realized I didn't even care if the guy could be perfect (we were playing prog rock, so the music was rather complex) what I cared about was the person willing to work with us, and were they someone we wanted to work with.
When I read Mick Fleetwood's autobiography, he said he never auditioned anyone for Fleetwood Mac. When he needed a new guitar player, he heard Lindsey Buckingham's playing on a record, and said "I want him in my band". No formal audition, no worries about if Lindsey could play the past material, it was was "I know you can play, come bring that skill and create something new with me". And of course, Lindsey said, if you want me, you have to hire Stevie Nicks too, and so he did, and the rest is history.
Music history is full of such stories. Which seems to be a much more organic way to do things than just the cattle call and formal audition so many bands engage in.
Rant off.
Anyhow, KIS, it seems you're already ahead of the game here, so that's not directed at you so much as it's my general feelings about the audition process.