I would not pay PSA any more money. You have their authentication which covers the entire autograph book.
I would mat the signature with a "window" exactly as you have done with the red line, and frame it with your favorite image of Wagner. Your preference may vary, but I would not even consider sending them $150 to do what has already been done.
I realize I didn't answer your question about the value of cutting away the Cy Blanton auto and submitting just the Wagner auto by itself. It may be more valuable that way, but depends on whether you're in it only for the money, or to keep it in your collection.
If it's the latter, I would definitely leave it un-mutilated and in tact, and would display it framed (as described above). If you want to sell it and realize as much money as you can, I will step aside for the flippers to weigh in.
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