But, let's say the candidate does successfully game the interview and gets hired. Your company should absolutely use the first N-days of a new hire to check fit. Many I've seen explicitly say the first three or six months is a probationary period. The problem is when companies aren't honest with themselves about making a bad hire (capability or fit) and letting the new hire go.
Particularly for internal job candidates, I highly recommend being direct and saying, "Here's where you're short. Here's what you can work on over the next year or so to get into a better position. It's not a guarantee, but you'll be better prepared." Give them homework.
If a candidate is really and truly interested, they'll follow through on the advice and follow-up on it. That gives you a better candidate to look at for your next req.
The basic reason why it is polite to give people flat, euphemistic turndowns -- not just at the end of interviews, but in lots of breakup situations, including exit interviews, declining of contracts, and breakups with SOs -- is that you don't want to prolong the agony or send mixed signals. You don't want to appear to be negotiating. You don't want to appear to be trying to cause excessive pain. You certainly don't want to provoke the person to burst into tears, physically attack you, stalk you for weeks, months, or years, or file a lawsuit.
You also don't want to tell a person that they're hopeless and will never succeed in the industry and then wake up to find out that they're Steve Jobs. That happens. It happens all the time. Interviewing is a mistake-prone, statistical process and decisions are based on hunches that cannot be explained, only rationalized, even to oneself.
There is a reason why constructive feedback is so valuable. People won't give it to you up front. I myself am much more direct online than in person -- in person I'm a hopeless softie, until you get me into an engineering situation or otherwise give me hints that you can take it. Not everyone has the emotional stamina to withstand the full force of MIT-style, anonymous-peer-review style power criticism.