I've never heard of this trick being used on such a large scale. I have seen it a few times on a smaller scale when a town wants to get to a certain juiced in candidate. They tell a candidate(s) that it looks like they are going to fail a certain part of the process and it will make them look really bad if they apply again or apply to other PDs. They are then given the chance to voluntarily withdraw from the process which they are told won't make them look bad. The candidates walk away feeling grateful that the PD did them a favor.