Bullshit, the Villa Lobos is actually quite nice in my opinion. And Segovia did a lot of questionable things.
As to amplification, it really depends on your viewpoint. In most concert halls, it's simply necessary in order to give the audience an enjoyable listening experience - every professional guitarist playing in a moderate to large concert hall would most likely use amplification unless the orchestra is particularly small.
The guitar comes across particularly well recorded or on film where the balance is not artifically loud, it just feels like you're sitting right close to the guitar.
I recently performed Rodrigo's Fantasia para un gentilhombre on BBC 2 and was miked up for that (although not hugely, it's a small orchestra, not much brass or woodwind).
The key is in the orchestration, really.