That's true to an extent, but I don't think it covers all the angles.
Information is difficult to lose. First off, even if we had no written documents in history, a considerable amount of information would be fed down from generation to generation by word of mouth.
If you go into a situation, with a completely empty and open mind, it's very difficult to get the wrong end of the stick, assuming you get fed the relevant information. Besides, in response to your point about entering the mind of those involved, as we advance as a race, we get better at empathising, especially as we can interpret the information objectively. I don't think one instantly loses the ability to empathise with those people, the moment that it becomes history.
Each generation has its own barriers to objectivity.
The new generation normally thinks it has the better perspective than the old one. In a few years some grad student will smugly think that his generation knows more too.