On the rationality point, I've definitely been one to talk openly when asked about times I've failed / would have done something differently. I've looked at it as a no-loss scenario: if I'm talking with a company and they can't accept that no one is perfect, then I'd rather not work for that company anyways.
Interviewing in a sense is kinda like dating, one way to really screw things up is if you're both looking for different things. If you're both trying to get into a fling, then yeah I guess lie your pants off and have unreasonable expectations of each other. If you're looking for long-term match, just lay your cards on the table and if you match, you match.