Tbh I think applying for Oxbridge is an exercise in lowering your self-esteem anyway - you get there and realise most of the people around you are smarter than you, you are basically subjected to interrogation in your interviews and then if you do get in I find the tutors often seem to require more of you than can be humanly expected. So if the letter was written as has been told to us here it doesn't surprise me as it's merely an extension of that...
Plus, there's no point being told it's all a bed of roses when it isn't, is there? I wouldn't want to be told something nice just to placate me or to soften the blow if I'd obviously been rejected for a reason.
(Incidentally, when I applied in 2003 for 2004 entry, I was rejected but told by my head of year that my college wasn't sending any feedback since they'd had too many applicants. Personally I think that was a lie and that she had received some and kept it from me as I hear of people receiving feedback so regularly even today - why would the college I applied to have been the exception? I don't really think teachers should hide feedback from students, and if your teacher had done this you would have complained as well.)