Great post/thread. I've always been a huge proponent of providing honest performance feedback to everyone on my team (have led groups as large as 50), but trying to do so in a positive way where even constructive feedback was provided with the clear intention of helping that person to do better in the future, with special emphasis usually on figuring out a way to have the person help themselves, rather than yelling and screaming and holding their nose in the doo-doo, like a dog, which is what way too many people think is "leadership."
Even when things went wrong, I would never get angry or publicly redress anyone and would always say, ok, we'll be fine, let's see what we can do to fix things and get back on track. And I would often ask what I could be doing better as a leader, either with regard to feedback or providing the right tools and opportunities and/or removing obstacles for people. Having some fun along the way was also important. People seemed to appreciate that style.