I think that the old saying applies: “It’s not paranoia if they’re really out to get you.” Ozpin is wary of trusting people because people have broken his trust. It’s really that simple. If someone punches you in the face…and then someone else does it… and someone else… and then you flinch the next time a new person suddenly raises their hand, you’re not irrational for thinking they might hit you. Until that person proves that they’d personally never lay a hand on you, you’re going to remain on your guard (and even then learned responses rarely care about logic). As I’ve said in previous metas, RWBYJNR has done nothing to show Ozpin that they wouldn’t ditch him like Raven, or turn on him out of fear like Lionheart. If anything, their rapid fire judgement of him (bird talk) and willingness to turn a conversation violent (drawing their weapons) imply that they will not react well to being told a complex and devastating secret.

The fear and paranoia Salem breeds are specific to those who don’t know about her. When something awful happens–like the Fall of Beacon–people turn on one another because they need somewhere to place the blame. It’s Beacon’s fault for not having better defenses. It’s Atlas’ fault for having a corruptible army. It’s the students’ fault for breaking a kid’s leg and killing a robot disguised as a girl, generating the kind of anxiety that attracts more grimm, etc. They don’t know who is really responsible, but QRWBYJNR’s reactions show that even knowing about Salem, the real responsible party, isn’t enough to keep someone from attacking a convenient target. RWBY in particular should have been able to watch that vision and go, “Damn. All this really isn’t Ozpin’s doing…” Instead having a small, defenseless target to release their anger on was too alluring.

When we come right down to it, Ozpin’s wariness of how a bunch of teenagers will react to this scary info is a lot more justified than those teenagers’ wariness of a former headmaster who has led them, comforted them, and given them a staggering number of his secrets.