How hard can it be to show some basic decency and courtesy?
I live in a place where I don’t have to worry about such lawsuits so I did give negative feedback, and most frequently the kind of people who apply to jobs they are obviously unqualified for are not the kind of people who take negative feedback well. They would rather argue with you.
The public sphere has been polluted to such an extent that these days I no longer openly advertise for jobs and instead go through contacts, luckily I don’t need many people so it remains a viable approach.
Regarding the larger issues, I have diffused the legal issue in the past to some degree simply by stating, "Legally, I can't discuss this with your further, however I wish you luck" or less directly, "Thank you for inquiring. As a policy, we don't discuss rejections, however I wish you luck." Many people will simply fold, while the crazy people are going to be crazy no matter what, but at least you tried to address people who are genuinely asking for feedback in a polite way that doesn't forever tarnish you.
I have started going out of my way to spread the word in my network about certain companies who behave poorly in the hiring process, however, even if it did not involve me directly. I will not do business with these companies, use their products and libraries (when possible), and recommend against colleagues joining when they come to me for advice, recommendations, or feedback. I encourage others to actually hold people responsible for sh*t behavior. This of course goes both ways for employers and applicants.