Network coding has been shown to offer significant throughput benefits over certain wireless network topologies. However, the application of network coding may not always improve the network performance. In this paper, we first provide an analytical study, which helps in assessing when network coding is preferable to a traditional store-and-forward approach. Interestingly, our study reveals that in many topological scenarios, network coding can in fact hurt the throughput performance; in such scenarios, applying the store-and-forward approach leads to higher network throughput. We validate our analytical findings via extensive testbed experiments. Guided by our findings as our primary contribution, we design and implement PACE, a Policy-Aware Coding Enforcement logic that enables network coding only when it is expected to offer performance benefits. Specifically, PACE leverages a minimal set of periodic link quality measurements in order to make per-flow online decisions with regards to when network coding should be activated, and when store-and-forward is preferable. It can be easily embedded into network-coding-aware routers as a user-level or kernel-level software utility. We evaluate the efficacy of PACE via: 1) ns-3 simulations, and 2) experiments on a wireless testbed. We observe that our scheme wisely activates network coding only when appropriate, thereby improving the total network throughput by as much as 350% in some scenarios.