I find Rule of Cool facilitates and smooths out gameplay
far more than it hinders it. There are outlier situations like always, such as a DM favoring one player over another consistently, but those are an issue of DM experience and shouldn't be used to condemn a flexible and useful DM tool like Rule of Cool.
The most common use of Rule of Cool I've seen is "Fudging the Action Economy." The swashbuckler wants to grab a chandelier, swing from it, and still get all their attacks? Sure. The assassin waits around the corner and wants to rush out and stab her mark when they pass by? Sure. You draw two weapons at the same time, or stow a sword to draw a bow and still get to shoot it? Sure.
I allow all of these
in moderation because they are quality of life improvements. My game is more fun because of it. The important thing (for me) is making sure everyone at the table has equal opportunity to benefit, and these little advantages in the action economy are being shared around the table. Bob is cool with Jane getting it, because Bob knows he can get the same benefit later.
The second most common is just allowing things normal people can do, even if the rules don't necessarily support it.
@Charlaquin used a great example of an archer disarming someone with a shot. Battlemaster has a maneuver for it, so whatever the player accomplishes should not be as potent, but it's something anyone could do (though not easily). In this case, allowing it but sacrificing damage is a pretty easy ruling to make.
Parity is a big issue that comes up a lot when invoking Rule of Cool. It might even deserve an entire thread of its own, but it's the basic idea/argument that a creative action taken by a character should be equal to just attacking, or slightly better with a skill check to balance out the added risk. It's easy for a DM to lose Parity either by asking for checks without the result being slightly better, or giving too much action economy to the player with no addition risk.
