"After further review. we at PSA have determined that your Babe Ruth card is properly slabbed, and was not damaged whatsoever (by us)."
In terms of being painfully obvious, it rates about the same as AJ's altered Jackie Robinson Leaf card. So would not surprise me if their actual response is similar to the above.
Hope they compensate you in an appropriate and timely manner, and best of luck getting them to admit any liability for damages!