AFAIC, the RAW exists to help me run the game in as enjoyable fashion as possible. A game system exists largely because it is conveinent and easy if the amount of fiat rulings, judgement calls, and on the spot rule smithing I have to do is minimized.
But AFAIC, the RAW are completely subject to:
Rule #-1: The game should be fun.
Rule #0: The DM makes the rules.
If the RAW gets in the way of fun, then I'm going to use my judgement. Alot of players on the boards seem to believe that the DM is bound by a social contract to use the RAW written. I tend to see the social contract as more abstract. I feel its my job to be consistant, fair, and entertaining. If I'm doing that, then I'm doing my job. Sometimes using the RAW leads to situations that I think are less satisfying for everyone involved, because ultimately even most players don't enjoy abusing a poorly thought out rule.
(A few players try to get in an adversarial role with the DM and see rule loophole as weapons to be exploited, edges that they can get on the DM. I consider this a form of anti-social and dysfunctional role play. If I the DM tried to exploit the players, and it would be easy to do so, nobody would have fun. Since I'm not exploiting the players, the least I think I deserve is the same consideration, and actually I think the DM always deserves more - because its the DM that puts the most effort into the session.)
I feel that most of the time the D20 rules help me do that job, otherwise I wouldn't be using them at all. But despite the high quality of the current rules, there are still glaring holes in the rules all over the place where the game just doesn't handle all situations well - the properties of inanimate objects, the profession and craft skils, the diplomacy skill - to name just a few. Anyone that thinks the RAW written are complete and logical probably hasn't questioned the outcome they produce all that much. In many of those cases I've not come up with a set of house rules that handles the situation well and I've seen some valiant attempts, even those fail in one fashion or another. Fortunately, these sitautions don't come up alot, but when and if they do I'll have no cumpuctions against not using the RAW.
I notice that every second poster states the D20 rules are complete, and the rest of the posters state that they are most certainly not. I suspect that is a gulf of perception not easily bridged.