The basic problem with fudging is that if you use it for less than saving a PC or preserving the continuity of the story, then you are trading the integrity of your game for something of little worth. But if you do use it to save a PC, then you find that you've diminished the PC and the story anyway. Maybe you'll prevent a complete collapse and maybe that will be worth it, but fudging is a lot like spending your principle. Eventually you'll spend enough of your principle that you game won't be generating enough interest.
And to use it successfully for any other reason than the immediate emergency need, requires prophetic powers on your part. If you fudge to save an NPC from immediate ignominious death, then you are gambling that the PC's luck won't turn for the worse and that you'll then need to fudge again to avoid the risk of a PC death. Or if you fudge because the NPC is too hard, then you are gambling that the NPC's luck won't turn for the worse and then you'll have to fudge to prevent the villain from seeming a pushover.
The truth is, you can't really know what is going to happen in the future. You can't know how things would have played out had you played it straight. So there is no way of knowing whether the game would have been better for it. You may fudge to save a PC, but the PC the player would have created had you not done so might have been that player's all-time favorite PC that added more to your game than the vanilla PC that died would have. You don't have omniscence, so you can't really know that you are selecting the 'best possible outcome'. It's quite possible and indeed almost certain, that the 'best possible outcome' is something you never even imagined.
However, what you can say for certain is that if you are fudging to select 'the best possible outcome', your players have lost the ability to choose for themselves and your games integrity is being lost and the players ability to trust you to be fair and impartial is being cast into doubt. The reward of defeating a villain is much less if the player's suspect or know that it was basically foreordained. The reward for solving a puzzle is much less, if the player's know that you are going to give them the answer anyway. The reward for sound tactics and making good choices is less, if the player's know that they would have reached basically the same point without sound judgment. In short, if you reveal that you are fudging, then you disappoint the players and cheat them of thier sense of accomplishment. But if you don't reveal that you are fudging, then your game is based on decieving the players, and if your players are even clever at all then chances are they are going to pick up on it and lose trust in the game. And either way, you are displaying very little faith in your players or in your game.
If your players are really green or tactically unskilled, the best sort of fudging is simply setting for them less difficult challenges than you might have were they green. Give them more resources to work with, and have NPC foes who are somewhat less clever or less brave than you could make them. Play to the player's strengths as they reveal them. Rather than pick your outcomes, help the players grow into the sort of devious players where you have to work hard to give them any real challenge. The greatest sacrifice of fudging is the loss of maturity or skill in the players that comes with it.
There are a few limited occassions where I think that the DM is right to pull from his array of tools the awesome hammer that is his right to break the rules, but that is a tool that has to be used with the greatest care. The chief reason to use it is when you've just outright made a mistake and you have to repair it and nothing else will do. In such cases, its best to be up front with the PC's and say, "I goofed. I forgot to tell you something very critical 2 scenes ago. I'm about to use one of my powers, and if I notice the convient device I beg your pardon for how lame this is going to be but I need to get the game back on track." One of the advantages of that is that it encourages you to be embarassed by fudging rather than to think yourself clever for doing so, when in fact what you are guilty of is thinking a hammer is the solution to every problem.
