Don’t exaggerate -- show where and how they can improve. Don’t put the candidate on a pedestal. Not only does it not look plausible, it will also set expectations for them that will be next to impossible to meet. If they have an Achille’s heel, don’t exaggerate it, but don’t hide it, either.
It’s always a smart idea to offer to write a letter of recommendation for a colleague who you know is well qualified for the job in question. Consider it good career karma; after all, you never know when you’ll need a letter of recommendation for yourself, and your colleague may be happy to return the favor.