So if you make a deal with someone for them to give you a credit for an unpostable WL book, and you post it directly to their WL, is there anything you need to worry about? If I save the PMs where they acknowledge that they do know it's unpostable and save my forum post where I described the damage in detail, I'm good right?

It is my understanding that this is perfectly ok to do and that you will have no more to worry about than with any other swap.   No more meaning - the book getting lost in the mail and/or getting ruined by the PO, that type of worry.

No actual experience with this, but I think you have to be careful that the recipient actually accepts the WL offer so it doesn't roll over to the next person who doesn't know it's an unpostable copy. Perhaps that's why posters request Auto-Request be turned on.

It sounds like you are worried about the same person complaining that the book is damaged?  PBS can see any PMs sent back and forth. So as long as you save those you should be fine.  Just make sure you accurately describe the damage.  And if by chance the person doesn't accept the WL offer when you post it to them: you can either put your account on hold right before it times out to prevent the book from going on to the 1st person in the WL line-or if you miss doing that: when the request for the book comes in: just decline to send for other reasons and put the reason in the explination box. 

I do this all the time and have never had any problems.  I ask them to have the book on auto before posting, and do not post before getting a PM back assuring that they have done so.  Other than that, I wouldn't worry too much.  All the PMs are on record, and as long as the book is in the condition stated, you should be fine.