IMHO you're taking it a bit too literally and seriously; I suggest interpreting it more loosely, ie "err on the side of assuming incompetence [given incompetence is rampant] and not malice [which is much rarer]." As a rule of thumb, it's a good one.

To me the more problematic part is anchoring the discussion into rejecting a specific extreme (malice) when there will be a lot of behavior either milder, or neither incompetence nor malice. For instance is greed, opportunism or apathy malice ?