If you don’t bench for major performance issues then that tells the team implicitly that there isn’t high accountability.
Saban benched a QB in a NC game. As a paid player you need to develop the resilience to bounce back from getting benched if you make some major mistakes that threaten the success of the team.
Also, does confidence precede success or does confidence follow success? I’m not sure “wrecking a player’s psyche” is something to worry a ton about. Some for sure but it isn’t like he’s forever crippled if he gets benched after a fumble.