From what I can tell it's an old-school grognard ideal that you have to earn your levels; leveling is a reward for playing smart enough to stay alive. Therefore starting above level 1 is cheating.
As one who does this, yes, that's close.
I have four reasons for doing this:
1) Levels mean more if you have to earn them, instead of receiving them "for free" from the DM. Means more to the new player, and means more to the existing players (doesn't cheapen the value of their experience).
2) For a true newbie player, D&D is complicated. It's much easier to run a low level character than a high level character, so it's better for learning the game rules.
3) For a true newbie player, D&D is confusing and opaque. They don't really know what options to choose, what will work well together and what won't, until they've actually played a bit. Given a choice of telling them what to do (taking the fun of developing a character away), letting them stumble in the dark and create a character that "doesn't work" as they intended, or letting them try with a simple 1st level character (limited in how much you can mess it up), the last choice seems best.
4) Danger is good and fun in D&D. "Balance", such as trying to nerf some classes so they are all the same, ensure HP are high enough that there's a grind instead of a chance of quick destruction (ahem), or ensuring by rule that PC's get enough treasure and can choose the specific treasure they want, is lame IMHO. Worker safety rules and worrying about income distribution are fine in real life, but a sense of prevailing against the odds and living by your wits on the edge of disaster in D&D is really great fun, especially since there's no actual danger to it. If you're auditing for equal opportunity treasure for all, wrongbadfun IMHO.
I actually give new player to my games three choices:
1) Start with a brand new first level character.
I find, for 3.5e, a 1st level character, particularly if a fighter-type or cleric, can survive well enough with a 3rd or 4th level party. I've seen a PC die from this, and I have seen PC's thrive. In a current campaign, a guy joined as 1st level when 3 party members were 3rd and one was 4th. Now 4 have just gained 5th, and he gained 4th. As a paladin, he's been doing his job (melee basher) well all along.
If campaigns were higher level, I'd point out that you can run a 1st level character with a higher ECL race, a race with ECL of -1 level to the PC party average (so 1st level, but same effective levels as the average for the others).
2) Bring in an existing PC that you played from 1st level in another campaign, subject to DM approval (to prevent Monty Haulism being imported from some other campaign).
I only saw one player go with this option, and it was fine as is (similar treasure and stats to what he'd have had in my campaigns).
3) Adopt an existing NPC that the PC's know in the campaign, typically up to the same level as the average for the PC's.
This has actually been the most popular option.