Damn, I hope I get to teach my RPG study class next year, because this thread is gold! Gold, I tell's ya!
From my perspective, the game and its acceptable rules and behaviour are a social construct by the gamers. This means that how much Gm Fiat and how much the GM gets to set the rules for particular circumstances is constructed by the group. However, this construction is not usually done through an explicit democratic process and even when that is involved, it is not usually completely democratic. The written rules form a kind of objective appeal that in some cases gives them more weight than they should have. This is why buzz's points are important to remember even though any GM can work around the rules. (This is the case even though I agree with many of the points of buzz's interlocutors.)
In the example of D&D, the rules are agnostic to intent, yet few games as they are played are agnostic to intent. Thus some mechanism to address intent is often required to guide the game according to the intent of the narrative, if not simply player desire for the narrative.
I see GM Fiat, Rule 0, action point mechanics, self-controlled healing reserves (Second Wind), and player cheating as ways to address these needs.