The best product managers are engineers who care about what customers think, and have enough soft skills to talk to them. Even selecting from that pool, it's likely they will add less value as a PM vs as an engineer. In the case of hiring internally, at least they can fallback to being an engineer. Compare that to an imposter from the open market with poor domain knowledge, and no technical skills.
Exactly this! My biggest tool as a PM was the ability to confidently communicate with our users and tell them "thanks for that suggestion, it's a good idea, but no we won't build that, and here's why" in a collaborative and positive manner so that our users will continue to use our product but understand why we are building what we are building, and why we have a very specific goal in mind.
PMs should almost work backwards - they need to have a product's goal and desired outcome communicated effectively to everyone from the get-to, and then understand what needs to be done from there. They should know enough about the business needs and market needs to be able to voice their opinion early on about what needs to get built, how it needs to get built, and why it needs to get built...and then leave the rest up to the technical people, with somewhat consistent feedback from users, stakeholders, and the market.