10% pass rate is definitely low and of everything mentioned here the biggest red flag for me. For a time at my commuter we had a 20% pass rate, and that was hiring experienced guys. That was not the norm though, far from it.
If you had nothing to do, without the 10% note, I would've jumped on it. Maybe ask them to clarify the pass rate, what are people failing for, have they rejiggered their training, etc. I can't remember how long your stay would be, but even at $30/night for a hotel, it's $900, to get 1 guy they are saying they will hire 10, that is $9000 in hotel costs alone to hire one pilot, just doesn't add up.
Pay at my commuter is $2k per month while in training, plus hotel, plus sim, company probably has $15k into a newhire when they finally finish up in two months up thru OE. I agree with the above, most companies don't just put money into people they don't plan on hiring.