I think it comes down to how badly the group is at the point they want to take an Extended Rest. This is where DM discretion kicks in.
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Bottom line - it should be a DM discretion thing and should only be used when it is warranted (end of the day) or in a dire situation where the encounter cleaned the party out... however the people discussing this in this thread are saying Well, if the group decide they want to take an Extended Rest at any point, its their game and they should be allowed - this is poor gaming pure and simple.
Sorry, but you are mistaken. DM discretion has nothing to do with it. The DM does not decide when the PCs want to rest, the players do. We are not talking about the players popping all of their Dailies in the first encounter and then going off and doing an extended rest. We are not talking about breaking the rules and allowing for more than one extended rest per day.
We are talking about WHO makes the decision on the PC's actions, including rest.
And the reasons why the players make their decisions are irrelevant. If one PC has 13 healing surges left, but another has 3 healing surges left and the group decides to go back to town, so be it. Maybe a player has a bad feeling about what's coming up next in the dungeon, so he wants his PC to be full up. Maybe a player is roleplaying his PC that if he gets badly hurt, the PC takes a break. Who knows? Who cares? Resting is not the DM's decision, it's the players'. The DM makes zero PC decisions. He influences PC decisions, but he doesn't make them.
And he especially doesn't make the PC rest decision for a game mechanics reason like "but the party still has a lot of healing surges remaining". Talk about meta-gaming.
The DM does control the rest of the game world and if it makes sense for the dungeon to have changed since the PCs rested, so be it. There are sometimes consequences to PC actions.
You're the one who claimed that the players are being spoiled and disrespectful if they decide after a tough encounter to leave the dungeon and go take an extended rest, and that the DM should either leave the group or TPK the party.
TPK the party? As punishment?
You cannot imagine how controlling that sounds.
If a DM told me "no, the PCs cannot leave the dungeon and go back to town to take an extended rest" for a game mechanics reason (you still have a ton of healing surges remaining) and without a good in scenario reason for it (like the PCs are in the Shadowfell and currently have no way to get back to town), I'd laugh in his face. Such a railroading DM doesn't deserve my respect. And yes, I have (once) walked out on a very controlling DM. Fortunately, I haven't run into many of those.
As a general rule, players tend to follow the DM's lead most of the time anyway. Any DM who overreacts to players once in a while not following his lead, and going off to rest after a tough encounter by leaving the group or TPKing the party shouldn't be a DM, or at least wouldn't be a DM long in our group.