You're absolutely right.
Protecting people who disclose wrongdoing is not protecting defamation, and it does not mean we should allow a person to say anything they want about someone else. For our part, we were a little concerned about the legal consequences related to “good faith” as defined in the act, because this makes an assumption about the person's intentions instead of examining the basis for the complaint.
The definition you just gave—that the person reasonably believes that what they say is true—preserves, in a sense, the spirit that we sought to incorporate in the definition of “good faith”, while removing the presumption of the person's intention.
I think that that is a step in the right direction.