In order to keep my answer short enough for this forum, and to avoid confusion, I am not going to go into major detail or quote sources. Besides, the question is so vast and open, that it would require a long list. I will just say that I am passing on what I have learned in my rabbinical training (Orthodox).
The OP asks: "Did Moses (puh) interpret the Word of God using his human faculties?"
Yes, sometimes he did. However, for the most part, he didn't. Some interpretations needed less or more reliance on his own human faculties. This depended on what G-d wanted from him. It seems to also depend on the gravity and leeway of that part of the Divine message in question.
For instance, the verse (see ten commandments) "I am the Lord your G-d etc." was not subject to much (or any) human interpretation. Most laws were pretty much black and white. However, some laws required human intellect to arrive at in detail. (this is part of what is called "Oral Torah" and it has intellectual rules like "Kal v'Chomer", or deriving a ruling in a stricter law because that ruling already exists in a lighter law etc.) In those cases, G-d wanted the human mind to be part of finding the true law in a situation.
The OP asks: "How was the interpretation of the Word of God safeguarded from human fallibility?"
The short answer is that it wasn't fully safeguarded from human error, and that's OK anyway.
A brief reading of Vayikra (Leviticus) 4, will show us that G-d decided to include among the temple offerings, a sacrifice in case the majority of the nation of Israel mis-interpreted the law and accidentally commited sin because of it. Such a sacrifice also applies if the High Priest of Israel mistakenly commits a sin based on his own misjudgment as well.
G-d never guaranteed anyone that He would always spoon-feed perfection in Divine guidance. He actually wants our input so we can earn a reward for being part of the Divine process.
However, it is also obvious that G-d would help us recognize mistakes in any Divine transmission, eventually, if we as humans really botched it up and forgot or mistakenly misinterpreted the law. The proof to this is Levit. 4 itself. How did G-d expect a nation that erred to offer a bull sacrifice for that error, if we would never realize our mistake in the first place?!
However, G-d does require that we set up natural safeguards, so He doesn't need to perform miracles to remind/fix our mistakes all the time.
1) Jewish scribes have detailed laws about writing scrolls of the Torah. The new copies must be checked, rechecked, and examined by multiple people against already existing scrolls to be considered valid.
2) Devarim (Deutoronomy) 17 contains the rules for disputes to be brought to the supreme court. This is so that arguments will be settled by vast majority opinion. Also, misinterpretation will not multiply and fragment within Israel. G-d will exercise His gift of heavy Divine guidance, if a matter is so important as to be brought to this ultimate forum.
3) Similarly, see the system established in Sh'mos (Exodus) 18. A massive system of men elected for their skill and honesty etc., was to form a pyramid of interpretation and guidance, and resulted in consulting Moses (and His Divinely inspired level) as a last failsafe.
The OP further asks: "...God planting the implied/correct meaning in the recipient's mind as well?"
Answer: Of course this is sometimes the case. It depends if G-d feels that such a thorough message is needed.
The OP further asks: "Is it that a Prophetic interpretation, even though humanly, is in line with divine intention, i.e. it is the infallibility of the Prophet rather than the message?"
Answer: Yes. Sometimes this is the case too. It depends on how much G-d wants the involvement of the person's/prophet's own efforts.
The OP ends by mentioning: "...there is also confusion regarding the nature of "divine inspiration,..."
Answer: As was just explained above, there are many levels of Divine inspiration. Some people pray and have a "feeling" about what would be truly right in G-d's eyes to do next. Some famous prophets were shown a clear vision with words and meanings. It all depends on G-d's judgment as to what is needed.
In conclusion:
G-d gave a Law/Torah (Divine Message), in a clear manner to Moses and Israel. In the process, He wanted the human mind to be involved with some of the levels of interpreting and transmitting torah. This does not make the conclusions any less valid.
Israel was to naturally safeguard the transmission of this truth for all generations using strict safeguards.
In case these safeguards failed on occasion, G-d would make sure the people got the correction. Therefore, we can always rely that the Torah's message and interpretation is valid and correct in our hands today.
