Yes, interviewees should be more honest, since by so doing there be in a position of not always trying to remember what they had lied about. in addition to this, by being honest you will gain trust from the people who are interviewing you and even if you don't satisfy them with your answers they will still consider you since you were honest.
It is a popularly believed that when you are very honest on your job application one is guaranteed of landing the dream job. This is not true. Most of the time one will find a job that, they have at least eighty percent of the requirements, being brutally honest in this occasion would mean losing the opportunity. In such cases, it is only human to tell partial truth and secure the job.
While I think the cover letter was really unique and probably helped get him the job, I think this could become the next new fad and then it will help no one. The best thing to do is usually found in the middle amongst the extremes. Be honest and truthful and don't exaggerate but still sell yourself and what makes you unique.
A brutally honest cover letter can sometimes be misconstrued. You're better off keeping it simple with the cover letter, get the interview with your credentials and then once you can meet someone in person or talk to them over the phone you can choose whether or not they're the type of person that will respond well to that.