No, that's how you read it. Obviously some of us read it differently. But either way, I would agree with that too.
I'm not surprised. In fact my informal tally of people who agree with me and those who disagree seems to indicate that everyone who disagrees with me also seems to disagree with what I claim that the paragraph is saying, but then strangely also *would* agree with it *were* it saying what I claimed.
If you as a DM feel you must "cheat", it's better to hide the "cheating" behind the rules, instead of saying: No, you can not do that, it would ruin the game. At least if you are an inexperienced DM.
Why is it better? Because you can't be honest about how you are conducting the game? I didn't think honesty and integrity were the domain of just one of the DMing styles. The players are people - and in my case my peers. They are not stupid, and they know when I'm lying most of the time (which is something IME chronic liars are not aware of.) They have no business being lured into a game under the pretenses established in the PHB and then lied to. This is not a matter of DMing style, this is a matter of honesty.
If somehow the reverse were true - I would have the same objections. If DnD were some kind of narrativist game, and the rules said "Observe Creature works when it is determined by the DM to be appropriate to the Plot", then I would have the same problem if the DM were secretly undermining his players efforts in this area as well. (An example is hard to give in this case.)
But then again, I am sure your mileage varies. However, there is no right or wrong way to DM. Well there is, but it's certainly not as black and white as you seem to think.
Well, I think this situation is clearer than you're suggesting, obviously. This isn't about "DMing" exactly or entirely. This is about how you conduct the game as a person, and how you deal with the other people at the table.
I admit that I can't judge your motives as a DM in every case. You make all kinds of rulings with ulterior motives in order to preserve the plot, and I can't say anything about the specifics. So you're not going to get caught sometimes. The funny thing about the DMG example though, is that it describes enough of the thought process to make it clear that the DMs explanation is a dishonest rationalization.
Why would you (as a DM) want to hide what you're doing as described in this case? It contradicts pretty much everything that's established as the point of the game in the PHB. Obviously I understand that narrativist DMs, and pretty much every DM, has some interests, hopes, expectations, etc. that they want to see fulfilled in the outcomes of the game. But at what point do you throw out the basic structures of the game, expectations of the players, and even your honesty in order to accomplish this?
(I had no intention of continuing along with part 2 when I started this.)
