First of all, I don't believe that anyone, barring a computer, can use all of the RAW. Why? There is simply too much of it. There are a LOT of rules in the three core books! Yes, some of the rules flow intuitively from each other, but not all of them by any means.
Given that, I stick close to some rules, alter others. Rules that I
know I have altered (or will be altering) get an official House Rule. Other matters are often decided upon on the spur of the moment, sometimes with discussion, sometimes by fiat. Once the ruling is made, I make a note of it and try to handle it consistently from there on in, but with the understanding that no one can memorize all the rules.
Do I fudge dice rolls? Sure! Somtimes I do this because of the dramatic effect, sometimes to be nice, and sometimes to be cruel and petty; I'm a GM

For the most part, however, I read whatever comes up on the dice.
I try very, very hard to not treat my games, no matter what the system, as merely set of rules for tactical combat with a few acting elements tacked on. I started out with miniatures battles (and saw many more, many more heated, and many worse, friendship-shattering arguments there over the years than I have
ever seen in rpgs) and I turned to rpgs to get away from the malarkey of having to analyze every milimeter of variance in the rules. RPGs are designed to be rather more flexible and much less adversarial. As such, I far prefer them.
