[Exhibitman]

First of all, on a raw card it is CSG, not PSA.

Second, looking for undisclosed flaws is part of the service:

"Items that display the Authenticity Guarantee badge in the listing are first shipped to an authenticator who inspects the item prior to delivery to the buyer. This inspection ensures that the item purchased matches the listing description and verifies the item's authenticity." [emphasis added]

An undisclosed paper loss that CSG spots will result in either a rejection or the choice outlined in the OP (which is a new one to me and, frankly, I like it). This is because...

Third, a no returns policy is enforceable with the AG service cards:

"For Authenticity Guarantee purchases, eBay Money Back Guarantee does not cover returns on the basis that an item is not as described, when the item is considered final sale."

Translation: if the seller lists it as a final sale with no returns and it passes the authentication process, the buyer owns it, period. The whole point of the service is to take away the buyer's remorse return option for sellers who do not want to accept returns.

If the item gets wrecked in the mail from the authenticator to the buyer, eBay handles the refund. The seller's delivery duty ends when the item reaches the authenticator intact. This is not new. If you sell under eBay's Global Shipping program, for example, your delivery is considered complete when it reaches the eBay shipping center.