Additionally it should be pointed out that I was frustrated with the dice (which is ok) and definitely not the GM (which is not).
Now that I think about it though, the backlash situation is a bit different. It's hard to make a judgement on that when we can't see the entire scope of the question. For example did the backlash directly cause you to fail the conflict? What other actions had been taken thus far and what actions were taken afterward? If you hadn't taken backlash would it merely have prolonged your defeat or could it have shifted the balance? It's tough to know how much of an impact that had on the situation as a whole.
I think what I would say overall is that I would probably do different things in different situations, but it's important to say that it is not the GM's responsibility to make sure the player's resources are spent wisely. If he feels the situation was too bad for the player then maybe he can give the player a break, but I don't think he should under all (or even most) circumstances.
If I had it to do again, My PC would still take the backlash: bursting the water pipes in the new age store was an undesirable outcome compared to my wizard just getting mangled.
The way it happened:
Alone at his new age store job, my PC is getting his ear chewed off by a Wiccan wannabe (and my Lore check said there was nothing magical about her).
Gunshots outside drew my character to the doorway (after ordering the customer to hide in the back) where he carefully tried to assess the situation without getting shot.
Customer turned out to be a Ghoul, who attacked the PC.
I used my one remaining Fate point to invoke an Aspect which resulted in the PC not being taken by surprise.
Ghoul and Wizard exchange attacks. He gets in one good attack, but I'm losing the war of attrition, and my wizard is running out of uses for his equivalent of Harry's duster.
Having taken some Physical stress, a lot of Mental stress, and one 4-point Consequence, I resolved that the PC had to lay some Maneuvers on the Ghoul. Declaration rolls weren't going well, and the GM was insisting on Fate points for some of them.
So then I marked my highest stress box to cast a 6-shift supercharged Evocation Maneuver, but rolled -3 on the dice, for a Discipline roll of +0.
I had been planning to tag a previous successful Declaration to make sure the attack hit, but instead I tagged it to reroll that terrible roll. I got a -1, which still meant a Discipline roll of 2, leaving me 4 stress to either release as Fallout or take as Backlash.
I had the PC take it as Backlash, and then the GM rolled Athletics. With an effective targeting roll of 2, the attack roll missed (safely). The next exchange, the Ghoul tagged my PC's "Shredded Arms" Consequence for a bonus to hit, and when I saw it was going to far exceed the wizard's available Physical stress, I knew I could either take a 6-point Consequence, or Concede: I opted to Concede, and it worked out.