1) In terms of DMing, are you a referee or a guide?
Ok, this is a big one, but I'd prefer to explain it on my own thoughs.
When I start a campaign I have two criteria to it.
One is the basic genre. If I can I choose players I prefer to choose those that either prefer the given style or that have no problem adapting, if not I try to adjust to the players preferences. If the players are an eclectic mix of preferences, ok, well have only one criteria in such a campaign.
Criteria number two is what it's all about for me, what I call "amazing schuzpa". That can be anything like great dialogues, big story twists, surprising revelations, tense fights or great stunts, you get the idea. It's the reason we play an if in a session no "amazing schutzpaa" happens I'm a sad little nerd.
Now I prefer if the "amazing schuzpaa" comes from the players/PC's. That's also what the flavor is for. If all players know it's a heroic game they can go out on their own and say "Let's safe stuff! Big time!". It's the same with other genres "Let's kill thing and take their stuff" in a dungeon crawl/powergame campaign or "Let's seduce stuff, steal from them and curse at them witfully" in swashbuckling adventure etc.
But even with a clearly defined genre players all to often just stand around going "huh" or do messed up stuff that just ends in confusion or chaos. Because of this you have to "feed" the players with hooks and NPC's that have their well laid out plans and sometimes you just have to spontanously throw out some "amazing schutzpaa" at them to get them back on track.
Let me give an example. I've so far played three sessions in a post-apokalyptik d20 game that's DM'ed in a complete referee style. And at time's I'm geting frustrated by a lack of "amazing schutzpaa", because the other players are so damn clueless about how to drive the story. We once spend over 3/4 of a long session only with getting lost in the wild and the three other building machines and brewing poison we didn't really need just because they didn't know what else they should do. I really wished our DM would do anything to draw us into, heck, even railroad us into some adventure. I went scouting alone in postapokalypttik world all the time. But nothing story significant happened at all.
So, to answer your question, I prefer to play the referee, but sometimes you just have to guide the PC's to keep things exiting. That's not to say I don't like downtime, I love it and think it's elemental to good charakter developement, I just don't want it to be 80% of my gaming time. I think a D&D session is a flame, it may burn bigger or smaller at times, but it's the DM's task to keep the fire burning and from geting out of hand.
2) Do you play hardball with the players when it comes to adjudication.
By your definition? Not at all. Many people here said they explain the happenings and then give in game terms. I do the opposite.
For example in your given case I'd say: "Your nauseated. From all those bugs crawling about you, trying to crawl into your mouth and stuff, your going sick as hell."
Actually for a total hardballer by your definition I'd be somewhat a nightmare player.
When he says:
"Your PC feels really sick from the dozen beetles that just crawled into his open mouth, what does he do?"
My first reaction would be:"So I'm sickened?"
"No"
"Ah, so I'm nauseated, righto. I move out of the swarm "or when playing a stupid/easily frightened PC" I beat aroun my hands and roll on the ground, so I effectly do nothing."
You see, I like where I'm at.
Only exceptions are thing where I'd think a discription would be extremely anti-athmospheric like the exact number of DR or "Ok guys, he's got 50 HP left after that one.
However you could call me a hardball DM in that I can be very unforgiving when I think somebody should have learned the rules by now (AoO's) or have better judgement. Most PC's I've killed died because of stuff like that. First level artificer runs into horrid rats, next turn rats go into flanking position, end of artificer. Monk drinking healing potion while threatened, end of monk.So most of the time I'm a no taking back guy, though I soften up time and again.