Mike, that's a creative response scenario. Here's what I see, if we make your boards two branches of a pink tree:
Imagine the red line is where nodes are. At the very minute the top board is pruned back to the target, boundaries start forming. Callus forms at the meristem (scar tissue forms on the outer edge).Other codit responses take place. Latent buds at the node are released, and as they grow the callus grows too, and added resources are available to the other codit responses as well.
Meanwhile on branch #2 of our pink tree, Decay fungi, moisture, acidic pollutants are dumped on the wound constantly. They make inroads into the stub through cracks, and the pathogen's numbers and momentum build. Decay and disease race down to the node where the red line is.
The tissue beyond the red line continues to get water. Latent or adventitious buds on the stub may sprout. All this activity beyond the red line--does it inhibit the codit response at the node? A strong Maybe is my guess.
"Once the fungus gets past the jagged area, it meets the exact same challenges fungus face with the cut end."
Here's where your scenario breaks down. The pink boards are a classic case of an artifice, as Shigo talked about. The challenges that decay fungi face at nodes with increasing branch protection zones are FAR greater than in internodes where no such clearly visible and documented physical and chemical barriers exist.
That said, with small ends on lateral branches I do follow the waitandsee approach to save time. But everywhere within reach a judgment and a cut are made. YOur stockbroker scenario left out the fact that we can know where the nodes are; the signs are very clear. Where the BEST nodes are, yes, that takes some guesswork.
But an educated guess is better that abandoning the tree to the forces of death and decay. Leaving jagged stubs is counterintuitive (for me and the client), and counter to the literature as I read it. If the tree that had the waitandsee treatment should fail sometime in the future, I would be
. Sadder yet if a charge of negligence was made.