pawsplay
Hero
It's the beginning of the night, the players meet a regular encounter, nothing special. The baddie walks up to the PC, hits three times, twice with crits and takes the PC from full to dead in the first round. The player did nothing wrong. No mistakes were made. Just the dice gods deciding the player is dead.
Do you whack the PC and force him to sit and observe for the next four hours because there's no reasonable way to have a new PC parachute in right now? Or do you break suspension of disbelief and parachute a new NPC in anyway? Or do you knock the damage down so that the PC is very wounded (negative hp) and let him live?
Which would be best for the game?
That's a false... er, trilemma. Since the encounter is otherwise inconsequential, I might go for the negative hp option, but typically I would just ask the player to start rolling up a new PC. There's enough of a party to continue, it reinforces the idea that no punches are being pulled, and parachuting in a PC is usually not so difficult. While it may be a short-term inconvenience, in the long term, it makes for a better game. Still, if it were the first session with new PCs, and the PC was not interchangeable in some way, perhaps a concept the player was looking forward to try out, I would probably rather go the negative hp route than awkwardly try to insert a functionally identical PC. I might also dish out some Con damage to sharpen the "near-death experience."
Still, I think it's worth looking at the larger issues. Did I introduce an inconsequential encounter with always-hostile NPCs that have the capability of killing a PC on a crit? If so, then I have erred. Either the encounter should be deadly in earnest, because it's interesting in some way, there should be an opportunity to avoid the encounter, or the mandatory encounter should be less deadly.
If the PCs, however, entered combat cavalierly, or were aggressive, or closed into melee when they had every reason to consider other tactics, sparing the PCs would not even be on the table.
I guess one distinction I make is between "story" and hassle. I don't really believe RPGs can have a story, in the sense of a predetermined series of events; even the most railroaded scenario can be distorted beyond recognition, with the right choices. What happens, happens. On the other hand, certain events represent such a disruption of play that the value of arbitrating the results, as openly and honestly as the situation warrants, must be weighed against the value of a clean end to what has gone before. In this realm of pondering how to continue the game without the PCs is where I think many of the posters can reach broad agreement. Again, there are basically two questions here.
1. Fudging dice: Mostly ok, mostly not ok?
2. Killing all the PCs: How much does the GM intervene and when and how?