Rips in dust jackets are fine.  I'd turn down the must have DJ RCs.  That would have you roll over to the next request.  I personally do include DJs that are worn or ripped.  (Some folks toss the DJ.)

I would include the dust jacket but turn down any RCS that ask for a dust jacket.  Dust jackets aren't required but if there's an RC asking for one then they are supposed to meet the posting guidelines.  I include a damaged dust jacket because some people still like  them even if torn.  Let them decide if they want to keep the dust jacket or not.  I wouldn't send one thats stained and nasty. But a tear can be taped and the receiver my prefer a damaged dust jacket to non at all. 

if someone has RC's of "must include dust jacket" does it make it unpostable at that point? - Yes. If someone has an RC requesting the dust jacket be included, then normal condition rules apply and the rip being over 1" would mean you'd need to say you can't meet that RC. If there is not RC requesting the DJ, then it doesn't matter if its in tatters or not there at all, you are perfectly fine sending the DJ in that condition.

I would also send the DJ and let the requester determine if they want to keep it or toss it, I myself don't care the condition as long as it is there.