When is it correct to use nominalizations? (Isn't nominalization a nominalization?) It seems the main problem is that they tend to mislead the reader. It is appealing to think that "being" and "understanding" are "things." I see how this sort of misuse of words can be misleading. But when does concise become too compact? The English language seems to nominalize words frequently--and often effectively (I'm thinking of George Eliot).
Your question's more like a starting point for philosophical, linguistic, and other research. No kidding.
You're right about the 'thinginess'. Anyway, humans just do what they can and try some more with language.
Let's start with an issue you may find interesting, I hope: nominalizations in English and many other languages most often allow to leave out the agent, patient, and other participants:
Killing, a sell or a visit doesn't say who, whom, when, where.
That's one reason why excessive nominalization can be used in malicious ways. ('Nominalstil', if you want to adopt a German term)
It's hard to say in general when useful flexible constructions get misleading. Mostly because verbs are so complicated, allowing for many different roles expressed by noun phrases, prepositions, dependent clauses and some more.
Sorry for my alluding overgeneral formulations. There's no short answer to your question for all I know about linguistics. Perhaps I read and heard too much on those issues.
By the way, verbalizations (to hammer, (to mouse as a cat or on a computer) are a totally different beast: the noun names a class of referents which nearly always fulfills a single role. The fun is you can't say which role just by looking at the noun.