How to balance? Tough question! I happen to confront that question just about every day of my life, actually. As an editor for queer people who often or usually think of themselves as artists, I'm SUPPOSED to productively criticize. I'm supposed to help them make their art better.

Yet ... for all the good reasons you mention, I often don't want to. Sometimes I feel a writer needs validation and encouragement for a genuinely good effort rather than a slew of nitpicky notes about how to turn good into great.

I probably misjudge a great deal of the time. I default to kindness, usually, while trying to criticize just enough to help.

But the balance is hard, and of course the balance for each artist is necessarily different.

No easy answers to your question, I think!