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In my group, GM Coup de Grace is not acceptable in most circumstances.  GMs are supposed to referees with the primary responsibility of making sure the players have fun.  It is not fun to be CdG'd out of a module in the first fight.  There is some acceptance of using CdG if the players have set up a way to repeatedly return dropped PCs to their feet, like Consecrated Ground.  Otherwise, it is considered a sign of a killer GM and poor sportsmanship.

There's no special guidelines for it in LFR because it's in the rules, we play by the rules, so it's usable by both PCs and NPCs alike.  Now, a DM that runs around CdGing everything in sight is likely to find themselves without players, but there's nothing restricting them from doing it.

It is a legitimate tactic. Nice? Probably not. Too much? Depends on the situation.

I have to agree that it should be used sparingly, and in the right circumstances. For instance, when the BBEG has managed to drop a character next to/within reach of him and has the action to be able to threaten the rest of the PCs. A "Leave, or your friend dies! (ready action to CdG)" kind of thing. Or as a means of negotiating an escape.

To have it happen in the first fight of a module, seems rather a poor way to use it. Certainly it doesn't seem likely to serve the story or the player's fun.

I liken it to people who object to certain PCs or monsters being willing to turn tail and run in the middle of a fight, thus escaping and perhaps causing the PCs to be unable to claim a certain reward. Sometimes the NPCs are chicken. Or evil.

CdG is a legitimate tactic, rules-wise.  Also, the examples of its use are fitting.  I especially like the hostage scenario -- it still leaves the party in charge of their own fate.

The story that prompted this thread was posted by Elder Basilisk in another thread.  I would cross-link but I don't know how.

 For instance, one of the PC deaths I observed was a fellow player. His tempest fighter rode into the room on round 1 and got hit by a couple bad guys for relatively low damage. Then the rest of the party moved. Since he wasn't very injured (not bloodied, I think he was down by a little less than one healing surge), we didn't heal him. Then, at the bottom of the round, an owlbear came out of hiding, smacked him twice on its standard action, grabbed him, then spent its action point to do automatic bite damage, dropping him. The fighter's turn came up and he made a death save. Then all of the remaining soldiers coup de graced the fighter. He survived two, but the third coup de grace dropped him below negative bloodied. Then the rest of our team got to go.

In this case, it was the first fight of the module.  While legitimate, it seems gratuitous to me.

One CDG probably won't kill you, but five will.  The original case mentioned multiple badguys doing it. 

The reality is, in any adventure, the DM can always kill one character - especially if that character is a striker or controller (the squishiest).  He can accomplish this by making it his #1 goal.  All bad guys attack that PC, no matter what.  Especially if the bad guys go in a clump (denying the PC-allies the opportunity to help/intervene).  Just make sure to keep hitting him while he's down - hit him until he's dead, not till he's unconscious.

Marks (the -2 to hit, plus possible ill-effects) cannot (in most cases) prevent an attack (especially a ranged attack).  They are deterrents.  The net result of not "obeying the marks" is that monsters tend to die faster.  But if the DM doesn't care if his monsters die in the first round (and die stupidly) he can almost guarantee to kill one PC.

This is why I consider it bad form for a DM to focus fire on a single PC with the intent to kill (not to drop).  It's trivial, and takes no skill, intelligence, tactical ability, or real knowledge of rules or the game.  Anyone can do it.  You're not special.  You're just a giant jerk.

Yes, there are thematic times and reasons for the BBEG to threaten a CdG to get a chance to flee, or what have you. But to have badguys routinely use it as a common tactic, is bad form and bad sportsmanship.

This is a heroic game.  The PCs die at negative bloodied, the badguys die at 0.  The game is mechanically designed so you DONT die very often, but you DO get dropped to "dying" at some frequencey.  DM's using the CdG action routinely are having their monsters meta-game that it is a heroic game (i.e. that the PCs are "special" and don't die at 0 like everybody else).  That's going against the mechanical and intended design of the game.

Over-use of CdG, or intentionally hitting down Pcs to "kill them", is (IMHO) bad sportsmanship.  I won't play with DMs that routinely do this, nor do I encourage this behaviour.  If you want a more brutal game, I can suggest many other role playing systems.