Ensapa, your question really makes me contemplate - why would the Dalai Lama want the real Panchen Lama to be put in hiding? He may indeed be a real incarnation.
Initially, I too had the mentality that the Chinese Panchen Lama is a "puppet" until I saw the videos on this website. These videos convinced me that whether or not the Chinese Panchen Lama is the real Panchen Lama, he has been groomed to lead and does have the charisma and given the authority to do so. After all, Tulkus are not "the chosen ones", they too went through many lifetimes of study and practising to become who they were/are.
I believe that for a Tulku to become a great teacher, there is the nature and nurture influence. If the real Panchen Lama is put under house arrest and not allowed to develop and continue his training to become a great teacher, then no matter how great the real Panchen Lama is, we will never be able to come into contact with this great teacher if he's confined and restricted in what he can/ cannot do, and he may not be able to do much.
Just a simple example to illustrate. China is known for excellent medal-winning athletes who are dutiful ambassadors, obediently spent their lives in pursuit of patriotic glory. For this purpose, they have the state-run sports system — a bureaucracy of training schools, teams and government organizations that selects and coaches more than 250,000 young people for the purpose of winning gold medals.
Below is what Chen Lu, Olympist medalist figure skater and 1995 World Champion said about training,
“Training in China is very different than in the US,” Chen Lu explained. “The skaters move away from their families and live with their team. We had to live in a dormitory year after year and we couldn’t see our parents very much. And there were so many pressures from the coaches, and from the government – it is not easy. It’s totally different from in the United States.”
In comparison, to groom someone who will be the spokeperson for all of Tibetan Buddhism in China that can rival the Dalai Lama, I am sure the training will be much more intense and it's a "make it or break it" situation as they cannot just recognise another candidate as the Panchen Lama. So at the end, if we have a great teacher who will lead millions in the Dharma path, whether or not he is the real Tulku, does it matter after all?