"Do you prefer people to be blunt with you are use tact?"
I prefer them to be blunt. I feel when people are tact about many things, the conversations become annoying and trifling as they beat around the bush about whatever it is they have to say.
That being said, tact is likely the most safe approach, as many people can be rather reactive to perceived criticism.
So it is more effective to smooth things over for these people, and more effective to be blunt with others. I prefer bluntness, because not only does it not involve obnoxious cloying, it gives you direct perception into whatever the issue is.
"How far does tactfulness go before it becomes a lie?"
I would have to really think about that question to give it what I would consider a proper response. But I'm not in the mood for that, so I'll give a basic response.
Tactfulness is essentially the art of getting some personal grievance or issue across to someone without having them feel hurt, or provoking a caustic response. I would argue tactfulness itself is not a form of dishonesty, but a manner of handling a situation. When there are white lies, or disingenuous representations of intent, then immediately the realm of deception has been entered.
"Do you tend to sugarcoat things?"
Only when necessary. In my experience of life, I've encountered many people who tend to be rather sensitive. And it seems to be culturally inappropriate in many different circles I've traveled through to be "rude." That is no bother, but rather my preference on dealing with them, if that's how I have to act.
My best friends and those who I interact with often find my blatantness refreshing. I am willing to say what's on my mind without worrying about giving offense to them, or even what they may think of me.
"Personally, I hate when people sugarcoat things or evade relaying an unpleasant truth. What hurts the most is to be denied truth. It is an insult to my intelligence and the ultimate act of disrespect. For instance, if you dislike someone, but say otherwise, you are basically saying you dislike them anyway because are admitting they are not worth honesty."
My views are actually very similar to this, but I do not perceive it as the perpetrators not thinking I am "worth honesty." I personally see it is them thinking I can't see through their bullshit game of trying to make me feel at ease instead of being straight-up with me. This is most disappointing when I am blunt with these people. It makes me see them as cowards.
"Also, you are potentially wasting their time on purpose for sick enjoyment. I bet you get off to what you think is their ignorance. You should really just say you hate them or that this dress makes her look fat or that he's a beta loser with like a single pathetic strand of facial hair."
These do not seem like normal examples of the use of tact to me.
If you go around saying that sort of stuff all the time, you're going to sabotage yourself. Some level of tact is necessary. The key is balance.