I wouldn't need the PSG if could decode and output on the PLD directly. But like @agranlund mentioned a few posts back, the code doesn't even get run unless the STEFLAG bit is set, doing that probably would have other consequences. I thought it was but the TOS patches seem to run other bits of code which is why it works for me.
It be why my attempt 2 years ago didn't work by setting the dip switches. Even if it enabled the format option in gem it would have proven something could work.
There must have been some floppy kit out there at some point to warrant FCOPY adding that feature. Also someone went to the trouble of adding TOS patches. But who and why ? I've never seen any mention of patched TOS other than kaos and never heard of floppy kits using the PSG.