First of all, take the Transformers: Revenge of the Fallen DVD away from him. He's not John Malkovich, and unless your company is Google, Facebook, or Apple, IT people aren't going to be falling all over themselves to work there.
There are far better ways to gauge how candidates handle stress, especially in the IT industry.
As some of the comments have said, I'd walk out on that interview. What that HR person is doing isn't about "stress," I don't even think it's being "bad cop," it's being, simply put, a confrontational jackass and liar. Even if you feel that language is too strong, consider the fact that a large percentage of the people working in IT (especially development roles and whatnot) tend to be introverts, "Type B" people, and, in general, those that prefer to avoid confrontation, and may not even do all that well at all dealing with people like your HR manager, but are otherwise very good at their jobs. By doing the things your HR manager recommends, you immediately alienate these people, and to everyone else that doesn't think just like this HR manager, you send the message that this is a potentially hostile work environment.
Gauging how someone handles stress is relatively easy in the IT industry - bring them in for a gauntlet day after they've passed enough interviews that you're seriously considering offering them a job. This gauntlet day would vary, depending on the job, but, for example, if it were for a developer, you'd give them a "code day," where you have a rather simple project and you give them a working day to do it. At the end of the day, you see not only how they tackled the project, but what they did throughout the day (how they reacted to things, etc). If they're tech support, you can give them broken computers to fix to see how they handle that. Basically, let them do something resembling the job (but not any real tasks, or you start getting into ethics territory again).
Also, don't forget that the interview, itself, is stressful, and you can glean a lot of information about the person from the interview, without resorting to underhanded tactics. A lot of people are good at acting, of course, so it won't reveal the same things or as much as a code day will, but it can still tell you a lot.
Remember: An interview is just as much about convincing a candidate to work there as it is about the candidate convincing you that they should work there.
What I mean here is that interviews aren't one-sided. You, as a company, are looking to fill a position. You want someone who can do the job well. You interview people because their resumes looked good. If they're really as good as they seem, then you will have competition for them. That means, when you've decided on a candidate that you're considering hiring, you have to convince them that they want to work for you. And that goes beyond the job description, into company culture, and first impressions.
With that in mind, what message, then, does your HR manager's behavior send to the candidates?