I think a lot of the time it's not the honesty that's problematic but rather the context and phrasing. I appreciate honesty and am a fairly blunt person but I'm also very sensitive. So I want people to keep it real but in a way that doesn't seem harsh or uncaring.

In this situation (and this is just speculation) there could have been a misinterpretation. Your therapist said "you're scared of everything" and you may have heard that as you're messed up or you've got a lot of issues. Maybe that's not what she meant though. She could have added more context to clarify why she pointed that out. For instance she could have said "you're scared of this but I know you have a lot of other fears too. You conquer some of those so maybe that shows that you can conquer this too. Or that it being frightening shouldnt rule it out because fears are common (for you and everyone else).
Did that make any sense at all? Hah sometimes things make more sense in my head.