USCIS has Primary Authority over Petition Approvals

As indicated, in every visa issuance case that requires an approval of a petition, that petition has to be initially sent to the USCIS. The USCIS has the primary responsibility to make decisions in such cases, under law.
Consular Authority
to Revoke must be Used "Sparingly"

The Department of State (DOS) issued guidance to its consular officers abroad in 2001 to clarify their role in connection with the adjudication of petition-based visas. This memorandum reminds consular officers that the revocation process should only be used "sparingly," and that consular officers should not attempt to re-adjudicate (i.e., reevaluate) petitions.

Furthermore, the guidance states that consular officers should only seek revocation of a petition if they know, or have reason to believe, that the petition approval was obtained through fraud, misrepresentation, or other unlawful means; or that the beneficiary is not entitled to the status conferred by the petition. The guidance also cautions that a petition should not be returned unless the officer uncovers new information that was not available to the USCIS at the time of that petition's approval. Thus, the consular officers abroad are not supposed to second guess the USCIS's assessment of the sufficiency or content of evidence provided. For example, a consular officer is not supposed to re-think the question of whether an applicant with an engineering degree is qualified for a position as an IT professional in an H1B case. That is a USCIS decision. S/he could refuse the visa, however, if it is discovered that the degree submitted is a forgery or that the individual does not actually possess the claimed experience required for the approval or other required qualifications.
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Consular officers are, under official DOS policy, limited in the application of the revocation request process for petition-based visas, therefore, which prevents a duplication of efforts by the USCIS and the DOS. When the consular officer chooses to request revocation of the approved petition, the revocation process is lengthy and burdensome. It is widely known that returning a petition with a request for revocation often effectively destroys the petition. This is particularly so in the case of a petition for a temporary worker, since the employer cannot always hold the job open for years, until the matter is sorted out.

Petition Revocation Process is Lengthy and Expensive

To begin the revocation process, the consular officer must forward the petition and revocation request to the U.S. Department of State's Kentucky Consular Center. From there, it is processed and returned to the USCIS service center that originally approved the petition. The USCIS then reevaluates the petition's approval and either reaffirms the petition and returns it to the DOS or, in many cases, issues a Notice of Intent to Revoke (NOIR) to the petitioner. The petitioner is given 30 days to respond to the NOIR with additional evidence.

This process can take anywhere from several months to over a year or two in some cases! Accordingly, by the time a NOIR is issued by the USCIS to the employer / petitioner, the petition itself may only have less than half of its original validity remaining. Furthermore, in the case of a petition for a temporary worker, neither the employer nor the employee is usually able to wait for the case to be resolved. It is expensive to respond and the loss of time and money is onerous on the parties. Consequently, most petitions are abandoned by the time a NOIR is issued.

In the unlikely event that a petitioner decides to respond to a NOIR and is successful in having the petition reaffirmed, the original consular officer has likely already moved on to her/his next rotation or assignment. The original consular officer will not learn that his/her decision has been overridden. Thus, although the DOS guidance exists, there does not appear to be sufficient oversight on petition revocations. This procedure often sends the cases into a bureaucratic black hole, with little chance of ever emerging again.

In other words, you have to really screw up the interview to get denied. Is that about right?

LynnandAhmed, can you cite this source please?

You are correct they do not deny petitions at the consulate level... they can and do refuse to issue the visa and then they return the petition to the USCIS who will either re-adjudicate or deny.

Yep, this is common knowledge. The OP's post looked like some "official" source, so I just wanted to get a link to it. We've actually got a situation in the RU forum where more info on this process might be of some benefit.

excerpts are here not authoritative but summarization

http://www.murthy.com/news/n_221vis.html

Cool thanks.