Thinking about this, I have this feeling that you've got two rival and equally valid schools of thought here, and that maybe what keeps conflict from happening sometimes are situations where the players and GM fall into the same philosophy;
- The GM's a storyteller and a facilitator as well as a referee. So the GM should fudge things a little to make sure people have a good time, and that means some lethal situations are made a lot less lethal, on the spot.
- The GM's a referee and a facilitator as well as a storyteller. So the GM should never fudge things. Having a good time means you have to accept a chance of screwing up, blowing up, and dying, even in situations you consider meaningless, because otherwise aren't you being railroaded?