Why not judge them by both?
If we were to judge Romans by modern standards, we'd find many reasons to criticize Romans but also many reasons to admire them more than their neighbors. Many of our modern criticisms, in fact, would have been shared by a fair number of Romans. The games, for example, didn't thrill everyone: one of the emperors hated the games so much he brought his paperwork along so he could at least get some work done!
If we were to judge Romans only by their standards, we'd also find many reasons to criticize them but also many reasons to admire them. Our adopted Roman attitudes, for example, would lead us to claim that they had gone soft from being too Hellenized, and we'd upbraid them for letting too many inferior people into the system. On the other hand, we'd also rightly praise the early Romans for their virtus and perhaps emulate their tough-mindedness a bit more than we currently do. (When I hear pampered college students whining about what victims they are, I sort of wish there were a Marcus Junius Brutus around to show them the meaning of severitas.)
Personally, I don't think it's really possible or desirable to judge Romans simply by the standards of the Romans. First, the Roman state lasted nearly 1000 years, and their standards changed enormously during that time. So, if we follow the advice to judge Romans by their own standards, which Roman standards should we use? Those of Cato the Elder? Lucretius? Seneca? Augustinus? Second, why limit our analyses by pretending not to know what we do know? Thanks to the enormous progress made in economics, biology, statistics, and physical anthropology, we know a lot about what does and doesn't work. Why not use that knowledge to gain insight about what the Romans were doing right and doing wrong?