Oh wow, that's awful, but given that it was for Skype, well.... that just explains so much, really. :D
The general format we're doing is that we do a screen share and they write a small bit of code. However, we do also tell them that they're free to use whatever dev environment/editor/tools/setup they're comfortable in (we don't care what tools our devs use). We're trying to avoid forcing them into some potentially inaccessible or unfamiliar coding environment (we looked at products like
$1 and ruled them out).
My personal feelings on it are that while I don't typically like to disclose my vision loss until I get an offer (if I need any accommodations - if I don't, I might not mention it at all), as long as I can do the exercise with a setup that works for me, then it's generally fine.
I wouldn't want to work with a company that doesn't want to hire me because of my blindness. But I also know that interviews are competitive so I'd rather not disclose it right away, until I've had a chance to make a little headway into the process and have begun to establish a relationship with the people.