PSR is fundamentally a way to increase free cash flow by deferring or reducing capital and train operation expenses. As the Canadian lines (Hunter Harrison's first full-fledged PSR applications) have shown, it actually shrinks the business, and will need to be modified if/when business growth is again desired. OTOH, Wall Street loves it because it "squeezes the fat" out of the operation and gives it to investors via increased dividends and short-term capital gains.

In the UP case, doesn't this sound eerily similar to their "rightsizing" in TX after acquiring SP, that ultimately caused the whole railroad to congeal?

As for its effects on BNSF, why should UP care about effects on their competitor's trains? It's UPs railroad, not BNSF's, at least in the short term. Unfortunately for UP, Warren Buffett has lawyers, who will have frank discussions with UP lawyers should it affect BNSF too much. We'll see what happens after that.