See, I can agree with everything you've said and still hold on to some of my sentimentality regarding the bolstering of egos.

And I don't think it's illogical at all to hold those apparently conflicting views - I feel the same way. I don't like seeing people hurt and I do like seeing people happy. That's normal for most of us. By the same token there's an element of recognition that skill is valuable - it produces good houses, good chairs, good music, etc. - and that it's earned, and deserves recognition - that praise just for showing up is somehow false, because it implies that skill and accomplishment are unnecessary or unvalued, or that showing up is as valuable as doing something well. I believe in merit. And (on the third hand) you certainly want to encourage learners in any art or craft, so to demand something of them they're not yet capable of, or in some way blame them for being beginners, is blatantly unfair. But I still won't lie and say I think a story's good if it isn't (and frankly, who cares about my opinion anyway?). I owe it to a beginner to not be unkind, but I'll still be honest. Usually that means silence. :-)

So, yeah ... there's more to it than any simple statement can convey, and I think on any given day a person can lean more in one direction or another.