Point well made. Here is how I would weave in the legal concerns.
Back in the days of unrestrained freedom of association, employers could afford to be direct about their reasons for hiring decisions. A rejection (or any other employment-related decision) could be based on race, sex, age, ethnicity, disability, or even just disliking someone for no good reason. This changed with the federal Civil Rights Act of 1964, which made it illegal to make employment decisions based on any one of several prohibited bases, including race and sex. The effect of that Act and its progeny throughout the United States was to curtail freedom of association by declaring that public policy made it repugnant to allow individuals to engage in invidious discrimination against discrete and insular minorities who needed special protection to prevent their being abused. While this curtailed a form of unrestricted freedom that had theretofore prevailed in society, only a very few opposed it or saw it as anything other than a great social advancement.
Once the law began to govern such relations, however, formality inevitably took hold and never let go. Without formality, (a) people could say the wrong things, (b) people could say innocent things that could be twisted into seemingly wrong things, (c) people (following casual exchanges) could make things up about what was said, even if employer representatives had in fact acquitted themselves properly, (d) people could compile statistics and find discrimination in any form of pattern or practice used by an employer even in the absence of overt discriminatory intent by the employer's agents, making it perilous to document explicit reasons too explicitly as a matter of routine practice (e) and people could do wrong things in spite of company policies to the contrary and against the wishes of company management just because, people being people, they can do unpredictable things.
In addition to discrimination, the law expanded to further curtail the grounds upon which an employer could choose not to associate with any prospective employee. If an employer adopted policies that were deemed "against public policy" for any reason, or if an employer permitted its employees to sexually harass others, or to retaliate against a person who had complained of company wrongdoing, liability lay in wait for the unsuspecting employer.
Now take all this and throw it into a mix that depends on a standard of proof that something was "more likely than not" to have occurred, and leave it to a jury to weigh conflicting testimony and other evidence - a jury that may well have it out for big company defendants - and you are left with an existential mess for any employers who don't immediately and completely take serious control over employment procedures in their company. Throw in liability exposure arising out of class action as a vehicle for redress (also new to the mix since the 1960s), and you liability risks become paramount over all else. And so everything gets assigned over to HR, leaving it entirely impersonal and sanitized: all in writing, all vague or non-committal, all positively de-humanizing.
But what is a modern employer to do? Or at least a big company employer that cannot rely on the discretion of many hundreds or even thousands of individuals to know all the rules, to apply them consistently and correctly, and to avoid being set up legally by some who would attempt to ensnare them?
Society has gained greatly from its laws against invidious discrimination but such laws have come at a cost, and the cost is precisely that identified by the author of this piece. People no longer can just be themselves in relating to one another in many parts of the workplace but need instead to be hyper-cautious and impersonal. Whatever good may have come from the positive side of these laws (and this has been considerable), this is a real price to pay on the downside.
Fortunately, in most small company situations, people can afford to exercise much more discretion than they can in large corporations. I think this is where the author is coming from and I too commend him for it. Directness and transparency are outstanding qualities. If the situation is small and controlled, and the people involved have the wits and discretion to avoid obvious legal wrongs and traps, there is much to be gained in building the sort of goodwill that you do by treating people decently even as you might be rejecting them as part of the interview process.