The increasing deployment of passive optical networks (PON) implies in an equally increasing need for automatic monitoring systems. Cost-effective solutions employing an optical time domain reflectometry (OTDR) system in the optical line terminal (OLT) have already been proposed, and “PON-tuned” OTDRs are already commercially available. Despite the claims from manufacturers and previous proposals in the literature, precise and reliable fault detection and localization are still unsolved problems for the telecom operators. In this paper, we evaluate the feasibility of obtaining reliable information on fault position and loss by direct inspection of the OTDR trace and via measurements of end-fiber reflectivity devices. Detailed calculations considering usually neglected parameters such as non-uniformity of splitters, fiber bending losses as well as different Rayleigh backscattering factors and fiber attenuation coefficients will be provided and experimentally verified. The limits and reliability of automated solutions for OTDR PON monitoring will be discussed.