I never fudge rolls. Combat, even with low level NPCs can be very deadly for PCs.
When my players went to the farmhouse:
-one died trying to climb a ladder one-handed (he wanted his rapier ready to stab whatever was at the top of the ladder, hiding in the hay). He failed his climb check (I even gave him a more generous 1 in 10 chance of falling!), fell 10 feet and rolled a 6 on a d6. (Out of the dozens of deaths, this one is still talked about!)
-when climbing down the ladder into area 6, another was nearly killed by the bandits all taking stabs at him, but managed to live long enough for everyone else to get down. Here, the PCs got lucky and killed all but the head bandit, who surrendered after witnessing the brutal slaughter of his gang. The party invited him to join the group, which he hesitantly did (and later fled when the party went into the insect shrine).
It very easily could have gone the other way, with the party getting wiped out. Roll up new characters and try again!
I have a few recommendations for you:
The free Quick Primer for Old School Gaming. It's short, and clearly differentiates modern style gaming with OSR. In addition to helping me, I shared it with my players and it improved their game as well.
http://www.lulu.com/shop/matthew-finch/
59558.html
Courtney Campbell's blog, Hack & Slash. He has a lot of great advice, examples, and discussions on how to GM OSR games.
http://hackslashmaster.blogspot.com/p/index.html
Finally, if you're on G+, join the OSR and Lamentations of the Flame Princess communities - there are lots of great blogs, discussions and helpful people there, too.
(I started playing LotFP/OSR with Better Than Any Man as well, and over a year later, my same group of players and I are still enjoying playing through all the LotFP modules. I hope your group ends up loving it as much as we do!)