The harm is that PCs die and players might get annoyed enough to not even play the game anymore. Is that what we want with 5E?
Uh, yea actually. The reason we roll dice is because the threat of/the chance of death is what makes it fun.
That was the first official encounter for 5E. Using foes that have an ability to shoot, move, and hide, and then shoot again possibly with advantage the next round is not the way to introduce brand new players to the game. Sure, the module stated that two of the kobolds should just walk right out and fight, and possibly many DMs did that (possibly not). But that encounter, if run according to the rules and the abilities of the NPCs, could really be pretty kick butt. PCs could die right away.
You are entitled to your opinion that people should just be thrown into the deep end of the lake and either swim or sink, but I don't view it that way. Sure, encounter 3 or 4, start throwing in tougher and tougher challenges. I suspect that the first encounter was pretty easy for some groups, pretty hard for others, and downright deadly for some groups.
Fortunately, LMoP comes with pregenerated PCs. If the players had had to create their own PCs the first time ever playing the game and those PCs died in round 2 or 3, yeah, I could see where someone would think that D&D totally sucks.
Personally, I would prefer that the first experience that someone has with the game system be awesome, not that it sucks. You are entitled to your opinion that them getting annoyed and never playing the game again is good for our D&D gaming community. I suspect that most of our fellow gamers would not agree with you on that point.
You seem like the type of player who doesn't enjoy that last type of villain and that's fine but I wouldn't call the module badly designed. I actually get more annoyed when a villain seems omniscient because he outmaneuvers me than when he bests me in combat/forces me to retreat. I'm not sure what it says in the module but this guy doesn't seem like he's unwilling to accept a surrender which could definitely reduce the chances of a PC death. If you want to run a game where you stroll through most encounters as mega badass PCs on easy mode who never suffer humiliation, defeat, surrender etc... that's perfectly fine and it's a playstyle preference. However, I hope to god the modules that we pay money for are aren't designed to be so easy.
Actually, the issue came up more when the first person to reply on this thread told me how honorable that NPC would have been. Late at night after finding out how many hit points that guy had? Yeah, that's probably what got me irritated in the first place.
It then occurred to me that the first two modules had two dragons that the PCs were supposed to attack and a half dragon that one PC was supposed to take a dirt nap over.
This is not a playstyle I enjoy. Let's see how big and bad the designers can make the monsters, just to prove to the players that their PC sucks. Sorry, I enjoy playing the hero, not the zero.
I'm glad that people like playing encounters where their PC sucks and has a good chance of going unconscious or dying. I don't particularly enjoy that. I think it's unnecessary. A risk of death, fine. A real challenging encounter, great. A fake risk of death (i.e the NPC is not REALLY going to kill you) under the fake guise of an extremely high chance of death, lame. Very lame. That's not threatening. That's just annoying. That's just the DM (or designers in this case) saying "Today, you are going to take a dirt nap, just because I can do that to you.". Meh. If the adventure designer kicking your PC into the dirt is fun for you, please enjoy your game.
Nothing wrong with defeat or surrender once in a blue moon. Nothing wrong with difficult encounters. But humiliation in a game is something that I think belongs in the waste basket of game design. Trying to shame a PC into a no win situation is just plain lame. Obviously, YMMV.
As a side note, there is this tendency of adventurer designers to write "This NPC will do this when the PCs arrive.". In some games, that course of action makes sense for the NPC. In other games, that course of action is totally illogical. An experience DM will be able to read that and go, "Yeah, I could see where he would sometimes do that, but there are 3 guys in chainmail in our campaign, so it's probably a stupid move on his part. I'll have him do this instead.".
For adventures like LMoP and HotDQ where WotC is trying to bring in new players and new DMs to the game, it's probably a good idea to have a few different options for each of the major NPCs and not be so concrete with their motivations and actions. Let the DM decide what works best. Sure, the DM already has that capability, but new DMs might not be totally aware of that. A lot of them might think that they have to run an adventure exactly as written, or they'll screw up something later on.