You're right, there are basically two ways to go to combat the damage caused by incomplete or inaccurate disclosure: disclose more to try and fix the misleading parts and result in fairer judgements, or disclose less so making those judgements in the first place is unrealistic.
As you say, in an ideal world, the extreme transparency approach might not be so bad. However, it does rely not only on symmetry of who has information but also on symmetry of the power gained from having that information. Until you're as powerful individually as the employer or government or financial institution you're "negotiating" with, and all the individual humans working on behalf of those organisations can be trusted to make unbiased and rational judgements about you given comprehensive data, that power symmetry isn't going to be possible.
Knowledge might bring power, but money brings power too, and so does having property someone else needs, and short of armed revolution not much brings more power than controlling the police and courts and jails. Transparency will only ever equalize the first of these on its own, and while laws and regulations about discrimination and reviewing automated decisions and due process can go some way to mitigating those other imbalances, until humans give up prejudice and bigotry and fear of the different or unknown, there will always be a dramatic asymmetry in real power. Forcing those with more of it to make neutral, blind judgements is the most effective tool we've yet discovered for keeping things as fair as possible.