It seems like the question of whether to back up or not hinges on what, specifically, the error comitted is. Per the IPG 1.4: “A good backup will result in a situation in which the line of play remains the same (excepting the error, which has been fixed),” as others have noted.
Case 1: The error is: {cast pithing needle for an incorrect mana cost}.
In this case, the phrase “the error” refers to the entire casting of pithing needle. The rewind would be warranted in this case, since fixing the error would result in Ashe not casting pithing needle for an incorrect cost, even though the rewind potentially opens up alternative plays. Since chalice is an ‘on-board’ counter, no additional information is revealed, so the fact that Ashe forgot about it should not matter to whether we rewind or not.
Cons: Ashe now may opt to not cast pithing needle, potentially opening up new lines of play. It is not necessarily clear that the ‘broken gamestate’ (with mana tapped and pithing needle in the graveyard) is substantially worse than the backed-up gamestate.
Case 2: the error is: cast pithing needle {for an incorrect mana cost}.
In this case, “the error” is specifically the failure to pay Thalia's ‘tax’ on pithing needle. In this case, a rewind will be less desirable, because we want to preserve the casting of pithing needle, but we want to have to correct cost paid. A rewind would open up new lines of play since Ashe could opt to do something else with the mana instead of cast pithing needle.
Cons: Philosophically, since we are seeking to preserve the casting of pithing needle, we would open ourselves up to backups that result in us being in the middle of casting a spell, which is not a place where you can terminate a backup. this seems inconsistent with the example given in the Annotated IPG of a player casting terror on a White Knight. applying the reasoning of case 2, we would only want to back up to the choosing of targets for terror, rather than prior to the casting of terror, in order to avoid opening up ‘new lines of play.’ To the best of my knowledge, this kind of backup is philosophcally incompatible with the IPG, since then we would only authorize a backup if there were a legal target for terror currently in play, and otherwise we would leave terror in the graveyard every time.
My own thoughts are: The presence of Chalice of the Void in play is a red herring. If Ashe had illegally cast pithing needle into a board of just Thalia, there would be no case to be made for leaving the board state as it sat, and we would authorize a backup, even though Ashe might opt to play something else instead. The fact that there is another effect in play that Ashe has forgotten about should not affect our decision of whether to back up or not. The decision tree in this example is only whether or not to cast needle, and that is not too much of a decision tree to back up through.
Tl,dr: It seems more consistent with the philosophy and practice of the IPG to back up than not to. The presence of Chalice in play is a red herring, since its presence makes it seem more likely that Ashe will not cast pithing needle after a backup. However, Ashe always has that option, even in cases where a backup is clearly warranted, so that consideration should not outweigh the damage to the gamestate caused by leaving it as it sits presently (mana tapped, needle in graveyard).
Ruling: Ashe: GPE-GRV warning, Norman: GPE-FtMGS warning, remedy: rewind to the point just before the casting of Pithing Needle
Edited Andrew Keeler (April 11, 2015 05:20:27 PM)