Fine, but then you are allowing the dice to run the game IMO and not the DM.

Different strokes, I suppose, is all I can say...
Not at all. If I have invoked the dice and am truly convinced that I was a fool to do so, I will just tell my players that. No need for subterfuge. "Hey guys, I think I screwed up here, this isn't the cool thing it should be." Or, alternatively, I actually make the modification something
real, tangible, existing in the world, and identifiable by the players. "You landed that swipe, you KNOW you did, he SHOULD be dead...but somehow he's not. A strange purple light exudes from his wound, and he laughs, but it sounds...different. Wrong." Suddenly there's now some new thing in the world--something the players can come to know, understand...and most importantly either
prevent or
exploit.
Neither of these things is fudging. The first is not, because it openly declares the rules in abeyance due to review. The latter because, while the rules have changed, it equips the players to
know that the rules have changed, and adjust accordingly. And even then, I'd only use that latter option with EXTREME caution, as in, I haven't ever actually used it in the game I run, in over three years of play. I
have openly admitted to my own failure as DM before though. My players have expressly told me that they appreciate my candor and that I
neither leave the game beholden to chance,
nor secretly pull them along by puppet-strings.
Part of it in such situation is even though the die roll indicates a hit, I can still alter the outcome to fit the story (remember that, part of what the game is about?) in other ways. If I don't want a hit to kill the bad guy, I give him more HP.
You have described two completely equivalent things. Fudging a die roll that reduces a target's HP such that it would kill, preventing that damage, is exactly equivalent to increasing the target's HP--in both cases, you have made it so that the damage dealt is retroactively meaningless, secretly modifying the world to produce a different outcome.
The players don't know, they don't know how many HP he has left, they don't know what magic he has or other protections or features that could turn that "final hit" into a miss, and they don't know his AC.
So what? You've changed the world without them being able to ever know it. You've presented them with things, leading them to believe those things are persistent and durable in the fictional space, and then turned that presentation into a deception.
This is like saying that because the players don't know
for sure that their extremely good evidence that the Countess killed the Baron is reliable, you can always just decide that all the evidence they've found up to this point was fake, even though literally the week before you gave it to them because it wasn't.
Victory is still victory, and the story goes on.
As I understand it, no, it's not. You have interrupted victory, and made it into a puppet show with yourself pulling the strings. The events that occur--success or failure, victory or defeat, vanquishing or being vanquished--occur only because you let them, not because they are the consequence of the players' choices.
D&D is DM-orchestrated theater because the DM is the storyteller and referee.
Again, I disagree. I'm not a puppetmaster pulling my players' strings. I'm a facilitator. I enable them to make choices, and those choices have actual consequences, even if I don't like those consequences, even if I think those consequences are disappointing. I only intervene--and even then, only do so very rarely--by either expressly telling my players that something has gone wrong, or immediately informing them that the situation has changed in an unexpected (and perhaps even unexpectable) way.
(bold added)
I disagree. It is not when I believe it furthers the story, it is when I know it does. The adventure for the players goes through is written, and if a later part requires the survival of the bad guy so he can show up again to foil the PCs' efforts or whatever, but a series of lucky die rolls prevent that, it is my prerogative as DM to change the narrative so the story can go on.
First question: How do you "know"? Whence does this certainty come? You clearly have some kind of ability to objectively determine the quality of a play-experience, so this would be incredibly useful information. Unless, of course, you're basing this "knowledge" on your perceptions and intuitions--aka,
your feelings, because it's a subjective evaluation.
I don't trust myself to have superior subjective evaluations than my players. So I don't make them. I let the players evaluate for themselves what is worthy and what is not. Thus far, I have received only one complaint, and that was when using a supplement that we have (mostly) finished our interactions with, so that specific problem is unlikely to ever come up again. (But I did take it to heart; essentially, the player argued that all stakes drained away when he realized that, because every room was randomly generated
just before entering it, it didn't matter whether they went north or south or whatever. They'd run into the rooms they'd run into either way, no matter what.)
This is no different than a DM who rolls damage that would kill a PC, through no fault of the player and just dumb bad luck, and decides to lessen the damage so the PC survives, even if unconscious. Killing a PC "just because" generally is not fun for the players. Some are ok with it, but IME most are not. (Now, if the player
does something and so is at fault...that's a different story.

)
If permanent death is so uninteresting, why would you even allow that to be an option in the first place? Every death is an opportunity for some insanely good story. Some of my best roleplaying experiences came about during the process of finding a way to bring a character (in one case, my own character) back to life. And you can pair it with so many incredibly interesting possibilities by giving the dead character an adventure of their own while they're dead!
Only in complete sandbox settings would I think otherwise--and personally I have never encountered one of those. You might allow the bad guy to die, sure, but then you need to compensate for that later on for the story to continue. I find it easy to give the players the victory but allow the tension with the re-occurring enemy to continue.
And, different strokes...
Or you make it so defeating that enemy isn't enough. DM lesson learned: don't make linchpins you can't afford to lose.
Like, this isn't hard.
Who cares if you take out the current leader of the assassin-cult? The cult still exists! It's not like its terrorist-style cells will suddenly vanish just because one important person died! The cult will need time to recover, of course, but the threat is far from over. Or if you knock down the queenpin of a vast criminal empire--suddenly, all the unsavory forces she had kept in check are free to do as they please, and the prize if they can win is fabulous wealth and power. Boom: threat ended, but now an almost
worse threat arises almost immediately in its place.
And, sometimes? Sometimes it's
more satisfying for the players to have a "disappointing" conclusion that proves their mettle. I had had a huge boss-fight planned for an area the party went to, an underground druid school in the marshy headwaters of a major river that had been burned by a third party's attack. A molten obsidian golem with mythril spider-automaton-leg claws, an unholy and accidental amalgam of twisted druids' exploitation of life forces and zealous assassins' shadow-magic. The party instead lured the creature back to a water-logged pit trap, tricked it into walking into the trap...and just shattered it when its molten-obsidian body solidified on contact with the water. They still, every now and then, talk about how cool it was that they outsmarted me and blasted through that thing like it was nothing, even though by comparison to the pitched battle I had planned, it was a trivial two-minute affair with zero fanfare or tension or excitement. Because sometimes having that contrast--seeing that yes, they truly can outsmart the DM, and truly win an unexpected or derailing victory--really is worth it.
So I never bring those preconceptions. I have honestly told my players that if they decided that all the stuff we've built up over time didn't matter, and they wanted to go sail off into the sunset, they could. I've told them I would be very disappointed (mostly in myself, for having failed to fill their characters' lives with adventure), but I would absolutely roll with it. They have, most graciously, said that there was never any fear of such a thing happening, but that they appreciate that I
would do that if that's what they wanted.