I'd decide whether or not it meets the guidelines and go from there.  If it doesn't, I'd mark it RWAP and PM the sender to let her know why.  I have received books that I thought were borderline, did not mark RWAP but also did not post again, thinking that one more trip through the mail would indeed make the book unpostable.

From the help center:

Cover:

• Must both be present (front and back)
  • note that a paperback missing its front cover is  usually an illegal, unsold copy
  • "cover" does not = dust jacket.  Hardcovers do not need to include their dust jackets to be swapped here.
• Cover not water damaged (there may be no water damage to any part of the book)
• Cover not torn or chewed/gnawed
  • some used book stores cut out a small part of the cover; if the amount missing is less than 1 square inch, this is OKAY
  • a small rip (less than 1 inch) in the cover is OKAY
  • yes, that does say "chewed/gnawed" above.  That means no pet-chewed (or human-chewed) books.
• A bookplate inside the cover or on the flyleaf is OKAY

The rip at the bottom of the binding that is about an inch is still postable.

When I have the paper peeling away from the binding a little bit, I often just reglue it back with a flexible type glue. (Note .... not to fix a split binding, just to fix paper peeling away.) I think its a gray area in the rules, but probably still postable.

Peeling of covers is OK. Tears under 1 inch are OK. Tears over 1 inch are not. If the cover is actually torn and it is over 1 inch it would be unpostable. It sounds like this book will most likely reach the end of its PBS life with you. Books only have to be postable when they are sent to you, they do not remain postable through your use. Its possible that you could repair the damage enough for it to remain postable through your read, but it does sound like it is ready for retirement.

I've received a few very old (1960s/70s) books in that condition, and I came to the same conclusion. They are already borderline, and I won't re-post them.  Some are keepers, regardless of conditions, and I am just glad to find the book again.  Others are part of a long series, and when I am done with the series, I will offer a deal on all of it, and include a description of which books are questionable.  Hopefully, I'll get rid of them that way.