I voted 2 as well. Once upon a time, I used to fudge more frequently, but I then realized that it was a deterrent to my fun of the game, even if the players were never aware of it. What if my fudging somehow ruled out a cool idea that one of the players had? Did the fudging make the game not challenging enough? Was suspension of disbelief in danger? So many issues...
So, in the end, I found a near-perfect solution. The PCs can earn Fate Points, which can be used to "cheat the system" in extreme situations. Because I rarely award Fate Points, players tend to only use them in desparate situations. In a sense, I've passed the fudging to the players and made it their responsibility to decide when to "fudge" (by using a Fate Point). As for my NPCs... well, if the story can't be modified to work without a certain NPC, then it wasn't a very good story to begin with.
The ONLY time when I fudge these days is when I somehow manage to grossly overestimate the PCs' abilities and unintentionally create an encounter that is certain to be a TPK. Even so, I am more likely to fudge here by having the creatures use suboptimal tactics than by fudging the dice rolls.