Greetings!
In general, I think it is ok to provide Player's with just a *bit* of mercy--but DEATH should always be ever-present, and distinctly possible. especially so when the Player Characters are just stupid, juvenile, scattered, using poor tactics, going off and getting separated, not paying attention.
Fuck 'em. Let the beasts devour them! Curb stomp the fuck out of them. The Players either get their shit together, or have fun rolling up more characters.
I think it is important to remember that in a strict sense, yes, the DM/NPC's have or can have immense advantages. However, in running a normal scenario--it is the players that inherently possess several large advantages beyond base stats and mechanics which tilt many encounters in their favour--they are a united *group* with greater unity and cohesion, as well as having 3, 4, 5, or 6 different brains working against just the DM. That kind of dynamic translates into a significant advantage, in my mind.
Semper Fidelis,
SHARK