Hussar
Legend
[MENTION=5143]Majoru Oakheart[/MENTION], [MENTION=22779]Hussar[/MENTION] - as a GM who has had to nerf/rewrite overpowered spells (esp in RM, where not all the books are equal in quality/balance), I've always tried to do it by getting the player on board and discussing how a balanced alteration/alternative can be arrived at. Sometimes the player has suggested nerfs. Sometimes a player has been very wedded to the broken version, and I've backed off.
To be honest, I've done the same. My beef generally comes when the changes come after the fact. The character has done something and the DM says, "Hey, wait, I think that's too powerful, you can't do that". It almost never, IME, works the other way - the DM does something and stops and says, "Hey, wait, I think that's too powerful, I can't do that". Just like in the OP, the massive damage effect wasn't taken back even though it was problematic.
Now, if I know before I take, say, Glitterdust, that the DM has alternative rules in place? That's 100% on me. No problems. But, again, IME, DM's rarely do that. It's all after the fact and they want to retcon the player's action to protect their scenario.
Pulling the rug out from under the players is never a good thing IME. If something is established in the game, change it for next time after a discussion with the players. Don't try to change things after the fact. That always leads to bad feelings and breeds distrust between the player and the DM. After all, once you've shown that you are willing to retcon an action taken by the player, there's no reason to believe that you won't do it again, and every reason to think that you will.
Which leads to Mother May I gaming where the player has to view every action both through his personal lens of how the rule of the game are written and through the lens of how he views the DM will interpret the action within the game world. Any and all actions become suspect.