Reviewers who are uncomfortable giving negative reviews are always free to offer that option to the author. I have actually done so in a specific situation where I felt that the author's request for review was too personal for me to give the negative review I would have given the book. I have heard of many reviewers who take that approach with any book. As the reviewer, that is your choice.
What is over the line is the author asking the reviewer not to give a negative review. The reviewer can of course choose to ignore that request, but it sets up the situation already of an author who is preemptively responding to a negative review. When you look at the evidence of this thread and know that there are authors who respond violently to negative reviews, why would you want to set yourself up for that possibility with an author who has already responded to the review you haven't written yet?
I wouldn't call it fraud either, exactly, but... think of it this way. If an author were to have the power to only allow 5-star reviews on Goodreads or Amazon, and nothing else, and so they made sure that that's all anyone saw, that would be fraud, right? Now imagine that the author requests that all her reviewers only give 5 stars or not to review at all, with the expectation that those reviewers will listen to that request. Her intent is to skew the ratings in the same way, she just doesn't have the means to make it happen. So while we might not want to put the label "fraud" on it, there's something fraud-like about it.
Of course, eventually someone would buy based off these ratings (that's the point, right?) and rate it lower. But I'm not sure with small or self-published books how often readers go against that grain. I have one novel that I reviewed after getting a free copy. My 2-star review was the top review for a long time on Amazon with many people giving it a helpful rating, whether because they read it and agreed or because it actually convinced them not to buy, but despite this, practically every other rating was 4 or 5 stars. Of course, it could be just that my tastes run differently from all those other readers...except that I had all those "helpful" votes. So I think it's harder to be the one who breaks the momentum of the high ratings.