I am of the school of thought that fudging is justified if players catch a lot of bad luck. If someone makes stupid-ass or suboptimal decisions, then it's his problem. I encountered an LG character a while back with 9 AC at 8th level, due to having 8 Dex and an RP decision that he would not wear any armour at all. I would not have held back if that character's decision had led him to getting thwacked.
