Recs from a current supervisor are always a conflict of interest as well.
1)If you are GOOD, they should give you a bad rec so you will not get into school, and stay on the job longer
2)If you are BAD, they should give you a good rec to get rid of you!
So, I honestly don't understand what the point is of recs. I had some (honestly) good ones. One of my recommenders sent me copies after he submitted them. They were FAR from love letters, and addressed some real weaknesses I have. However, they were overall positive, and I think that "needs improvement" parts gave them credibility.
This being said, I wonder if committees can spot a rec that the applicant writes, and just has their manager sign.....
Anyhow, I guess this is just a long-winded version of:
"I don't think recs should matter because it is hard to tell how authentic they are"
One more bit - I'm not bitter as so far I am 3/3 on my applications