I think this is largely an imagined scenario. Even in "small towns" the developer network is not so tight that you're going to have people trying to blacklist

I think this is largely an imagined scenario. Even in "small towns" the developer network is not so tight that you're going to have people trying to blacklist your company on the grounds of not getting a formal rejection notice. Plus, if the 1 developer you DO hire continuously tells people it's a great company working on cool stuff, that would outweigh the negative comments from the other 99.