The fourth-round tie at Anfield turned the hosts' way after Balotelli was introduced as a substitute in the 79th minute.
At that point Liverpool were 1-0 down thanks to Marvin Emnes' fine 65th-minute strike, but Balotelli then equalised with a close-range finish within seven minutes of coming on, the maverick Reds striker providing a reply to his critics as he ended an eight-match scoring drought.
Swansea defender Fernandez was then sent off in stoppage time as referee Keith Stroud deemed his challenge on Philippe Coutinho worthy of a red card, and centre-back Dejan Lovren subsequently secured a place in the quarter-finals for the home side in dramatic fashion with a 95th-minute header.
Put to him after the game that Balotelli would now be making headlines for good reasons, Pascoe said: "Of course. That is Mario.
"He is working hard in training and he got his just rewards coming on and getting the goal."
Another notable moment involving Balotelli came pre-match when it appeared he was sent away from a warm-up exercise by Reds coach Mike Marsh.
Pascoe stressed there had been no issue between the pair, saying: "He was sent in because he sort of twisted his studs in the ground.
"It was just to see with the physio if he was alright or not. He felt something in his knee, but - as we saw - he came on and his knee looked alright
"We had to assess him. But he is fine - he only went in as a precaution
"It (the goal) is great for Mario. He wants to work all the time. He is still a young lad, a tremendous talent and that is what he wants to work on - his movement, his finishing.
"After every session he wants to do that for himself, it was great to get that goal."
Source: PA