...she was good enough to get and keep the job, but couldn't get past the HR hurdles on the straight truth, because of their reliance on "credentials". The underlying problem, of course, is that HR people have no insight into the genuine potential of candidates, so they rely on paperwork as a substitute.

Ideally the thing to do would have been for her to challenge that situation by using false credentials to get given a chance at the job, get it and do it for long enough to show she could do it very well - and then come clean and offer her resignation. The ethical dilemma then might have been if she was offered the option of keeping the job on condition she held her tongue about the whole affair...

Polishing up a CV so as to camouflage the embarrassing stuff, make yourself look better in some respects than the facts actually indicate, and put a positive spin on things generally, and then doing the same in interviews - I'm pretty sure that's pretty standard practice. In principle this is no different. I'd be very surprised if some of the people making this decision hadn't done that kind of stuff in the course of their careers.

"Cast the first stone..."