Step 1: Understanding the Sentence
This sentence provides a method for judging a person's character. The first blank needs an adjective to describe "measure". The second blank needs a conjunction to introduce the method or manner of observation ("watch ________ he treats...").
Step 2: Evaluating the Options
First Blank: "True measure" is a very common and strong collocation, meaning the real or authentic way to judge something. "Exact measure" and "Real measure" are also possible but "true measure" is the most idiomatic.
Second Blank: The second part of the sentence describes the \textit{manner} or \textit{way} in which someone's character is revealed. The conjunction that introduces a manner or method is "how". "Watch how he treats..." is grammatically and logically correct. "Where" refers to place, "who" to a person, and "thus" is an adverb of result.
Let's check the pairs:
(A) Exact, where: "Where" is incorrect.
(B) Assess, who: "Assess" is a verb, not an adjective. "Who" is incorrect.
(C) Real, thus: "Thus" is incorrect.
(D) True, how: "True measure" is a strong collocation. "Watch how" is the correct structure. This pair fits perfectly.
Step 3: Final Answer
The adjective "True" and the conjunction "how" create a meaningful and grammatically sound sentence. Therefore, option (D) is the correct answer.