I haven't bred dogs but have bred cats. I would be tactful but give an honest opinion, stressing that it was my opinion and someone else might have a different opinion. If specifically asked to point out any faults I would do so and also point out any good points and weigh them up against each other - after all there's no such thing as a perfect dog. I would also point out that all exhibitors take the best one home with them :)
My reasoning for this is that if I wasn't accurate in my assessment the animal might be put in a show and sorely disappoint the owner. I have seen this happen in the cat world and its not very pretty to see an exhibitor demanding that a judge explain why the cat didn't win, only to be told that their cat really isn't show quality :(. They had paid 5 times the average price and been told by the breeder (well respected, 'big' in the breed and a show judge

) that it would win every time it was shown and be a champion.
Just my 0.02p worth :)
Regards
Dill