What should the balance be between a "tough" GM/DM ("These are the rules!") vs a "soft" GM/DM ("Forget the rules if they get in the way of player fun")?

The reason for the question is that last night in our game this issue was a key theme. Background: 16 Episodes ago (E102) a PC was sadly killed in a fight. For the 1st time in my ~35 years of GMing, the player wanted to try to bring their character back to life. As the GM I said "Go for it as the rules as written (RAW) do allow this to happen, but it's hard to do, expensive & there is a strong chance of permanent, non-repairable, damage".

Last night the character was brought back to life, but as expected there was some permanent damage .... & it was NASTY! The RAW do specifically state the risk of permanent damage & how to handle it but the table & the results that the player rolled on were homebrewed by me.

One argument in this hobby is "this is just a game, so just throw the rules away if people aren't having fun" vs "if the rules are meaningless and the PCs are invincible then it's just boring. Rules, and possible PC death/injury should mean something".

What do you think? Did I, as the GM, do the right thing? Was I fair? What could/should I have done differently?"

My one request is, if you are going to criticize, is please watch a little of the video before you comment.

If of interest key moments in the episode include:

2:23:00 Start of the healing

2:29:00 Character brought back to life

2:33:00 Permanent damage rolled by player

Thanks.

Rolemaster Actual Play episode: (E118) Ain't no place for a Hero "The Pain of Reanimation"

https://youtu.be/rTp6L6KIr0c?si=VUqP_8MWhypndc-h

May the dice roll in your favor!