Lol I did think of my book when I read your OP I think it's perfectly fine to let the author know you didn't really like their book - I do think it's kinder and more courteous to perhaps not post a review if it's less than 3 stars, and you've already said that's what you'd do anyway, so I don't see a problem really. I think I've forgotten your question... what's the dilemma again?? You can't really avoid hurting an author's feelings if said author doesn't take well to negative feedback, and an author who takes criticisms well wouldn't give you any trouble. Perhaps what you should be careful about is rather whom you choose to accept books from - if you know that person's rather sensitive and defends her every choice to the death, then it's safe to say you should probably not accept a free book from this particular author in return for a review. And as others have said, it's good to state from the beginning what you expect of each other. I personally ask that if it's anything less than a 3 star review, then I'd prefer not to have the review at all, but I wouldn't be against the review including some criticisms - that's what reviews should do, after all. Someone on the forum once told me he doesn't trust glowing reviews anyway - he finds reviews that include the negatives to be more trustworthy. I think though it's pretty hard to remain unbiased when you know the author in some way. I'm pretty sure one reader gave me a far kinder review than she would have if she hadn't known me (it was another member of the forum). She was honest all the way through regarding her opinions and how she took the book via email, and I do believe she enjoyed the book - still, I think she held back for my sake But then I don't see anything wrong with being kind and a little gentler with your words - a book, no matter how bad, is the result of a lot of hard work and much love, and should be handled with care when possible. Being kind isn't the same as being dishonest.
I would if I had something worth reading. Just scribble the title on a match book and use it to keep something from wobbling.
I just had an author contact me personally and ask if I would read her book. When I said yes, she sent me a link to where I can buy it. I've decided that, on balance, I like being given free copies to review.
You got a free copy of my first book...although the second won't be free. The end is the best part. Also I haven't written it yet (got about 64 pages so far though).