> Tell me a little about Jim's day-to-day
> Sure... Jim is an above average junior software dev...
> Sorry you say junior or senior dev? Does Jim have team management roles?
You can give a glowing review, but depending how how Jim portrayed himself, the review can be taken by the recruiter as a net neg/pos. To directly address your question - I don't think there's much down-side for a reference to always provide a positives reviews. Just keep in mind that an experience recruiter will probably realize this too (they've probably been burned before), and have some clever ways to ferret out the key info they're after.
I think the "references" under discussion here are actually phoning up former colleagues/managers for more detailed questions.