Doing it a race situation is the only fair way to do it. If Lenton chokes up in the final of her nationals, what is she going to do in the final of the Olympics? She didn't, but if she did, there is no way she should be picked on the team.
Expecially since Australia has 3 of the fastest 4 swimmers ever in the 100m womens, and the current top 3 in the world (although no other country have had their trials yet).
He's retired now, and forget his name, but a male breast-stroker was a great performer except in Olympic trials, so never made the Olympic team in the 2 Olympics he's career expanded.
Basing it on times only would be an awful decision.