"Doing them a disservice" is by definition not kind, I think.
Note that the phrase isn't "you can never be too flattering."
This interpretation does make it a very vague instruction ("okay, so what's the 'kind' thing to say when someone shows me a project I think is poorly done?"), but it's pretty damned obvious to anyone but the most stubbornly obnoxious that the kindest thing is never "rip it to shreds with cutting sarcasm and mockery".
By extension: seeking the kindest way you can respond means thinking hard about what response will be most helpful and supportive of them. That might mean being supporting but giving them strong nudges towards working directly with potential customers... but regardless, it's about having a conversation that you can exit on friendly terms.
It's certainly possible to do even when you have important negative feedback to offer.
Note that the phrase isn't "you can never be too flattering."
This interpretation does make it a very vague instruction ("okay, so what's the 'kind' thing to say when someone shows me a project I think is poorly done?"), but it's pretty damned obvious to anyone but the most stubbornly obnoxious that the kindest thing is never "rip it to shreds with cutting sarcasm and mockery".