Tony your right in your interpretation of whats going on. Also I am aware that both you and fungus have a much deaper understanding of and ability to describe the actions of decay fungus than I do. I have however worked on, felled and inspected quite a few Monterey Pines as whopping great mature ones are 2 a penny round here.
My experience of this tree leads me to think that long before decay become a structural problem in these trees (unless it is present in the region where stems bifuricate) crown condition will already be well into decline. These trees grow quickly and have big vessles in the wide sap wood rings. I believe that soon after infection with phaeolus, the vessels become partly dysfunctional. As the tree becomes stressed at this early stage some times red band needle blight begins to thin the foliage and the crown starts to become very sparse. Other times large limbs begin to fail. We all know these are fast growing trees that end up with very heavy, end weighted limbs. I think when the trees become stressed they are unable to lay down reaction wood fast enough and big chunks drop off. Either way the size, weight and sail area of the crown is reduced so that gfailure becomes less likely.
In the case of this tree, if the crown condition is still relaitively good, some thinning and reduction of the large heavy branches would be advised to reduce the likely hood of branch failure. I dont know what the staining is on the bark, I've never seen it to that extent.
I could send you copies of a couple of inspections from this year if you like. Both trees were knackered, one of which was surounding by huge phaelolus fb's but it was still the failure of one of the stems, rather than the whole tree which I was concerned about.
After felling some of these pines, I have always been supprised by the relatively small amount of fully decayed wood you see at ground level. I am pretty convinced that the crown will disappear long before the stem collapses in the vast majority of Monterey Pines infected by this fungus, due to the shear mass of their stems.