MIT freshman grading (pass or no record) is described at
http://web.mit.edu/registrar/reg/grades/freshmangrading.html . I think not showing failing grades on a transcript is a little dishonest. It's a transcript, not a highlight reel. The essay from the MIT admissions blog
Skipping Class and Failing Bio shows that the freshman grading policy encourages some students to be irresponsible.
Universities can be evaluated by many criteria, and I understand that MIT is a great school for many people. Most of the student blogs leave a much better impression, and MIT is to be credited for its openness in sponsoring the blogs.
