As a player, I agree with a lot of what you guys are saying. I'd run. I'd actually find that more interesting and believable. As a DM, I'd make certain the characters knew for a fact that in my games, TPKs are a possibility, and suggest they play carefully. If my games were, over many sessions, incorporating only CR-equal encounters, I'd then preferentially try in-game device to warn the characters of the toughness of the encounter. If it wasn't enough, i would not hesitate to then say, once off, after the first round; "this encounter is tough. Are you sure?" If they continued then? Roll the dice in the open.
I have my preferred playstyle and expectations, but its a good idea, IMO to know my players. If I know, in advance that they are likely to do this or that thing, and it is likely to cause a TPK, then I have to think carefully before I go ahead with it. Because this is going to suck for everyone in the end. I'd design encounters that are likely to be tough with a few outs, at the very least. If I had a party that engaged a strategy I didn't like, or for the purpose of telling a story, decided that the characters need to learn to run sometimes, I'd make sure they understood.
From what I've read, I don't think the DM did enough. I don't agree that the mephit was a good way to do this. Its no less meta-game than a brief OOC warning, and less precise anyhow;- what we as readers might infer, knowing nothing else about the game world is that in fact, the possessor of a mephit familiar is actually quite defeatable by such a party, perhaps, with a few lucky shots, even within 1 round.
And further, my guess might be that the DM didn't intend this to happen; and if that's the case, thats just poor planning. I don't agree that that's incompetence tho, even the most magnificent DMs here, I'm sure, have made this easy-to-make mistake from time to time