Seems easy to thwart with two exam proctors, one at each end of the exam room. Hypothetically, the whole affair is going for maximum manual effort (grading), so why not double down on test-taking labor too?

It's thwartable with adequate proctoring. I know about this mode because I found students doing it, and the students in question endured substantial academic consequences.

Large lectures have hundreds of students, and to properly proctor an exam for one of these classes, one needs dozens of proctors.

It can be done, but observe: for most faculty, maintaining the integrity of their course does not aid them on the path to tenure/advancement.