I have to point out your B scenario is incorrect. Joe never testified under oath Mike told him those words. He was asked to speculate what Mike may've meant. Whether he was talking about his 2001 perception of what Mike meant or his 2011 perception of what Mike meant is debatable as you have pointed out due to hindsight bias but there's no certainty in his testimony as to what he was actually thinking in 2001. This case was never investigated properly. The OAG approached it from the beginning like they would investigate a cover up instead of investigating a sex crime which is how they should've been doing it. That's why we have so many tainted testimonies. It's a big mess.
Joe never testified under oath Mike told him those words. He was asked to speculate what Mike may've meant.
The transcript I read does not have Eshbach's asking Joe to speculate what Mike may have meant when he met with Joe. The first question was "what did McQueary tell you he had seen" and the followup question was "I think you used the term fondling. Is that the term that you used?"
In response to those questions Joe testified as to "fondling, whatever you might call it, - I'm not sure what you would call it-a young boy." Joe then expanded on the word fondling by saying he "didn't know what you would call it" but Sandusky was "obviously doing something with the youngster; It was a sexual nature" and Joe was not sure exactly what it was. Mike was "very upset" and Joe "knew some kind of inappropriate action was being taken by Jerry Sandusky with a youngster" in the shower of the Lasch Building.
I really don't understand your statement as to speculation and that Joe never testified that Mike told him about sexual acts. If you don't like the term sexual acts then feel free to substitute your description for the testimony I just quoted.
Returning to my scenario B, your description of what Mike told Joe he saw we can label X. We will label horsing around in the shower Z.
Now if Joe had been told on that Saturday morning in 2001 that McQueary had observed Z, then Joe's testimony in 2011 to the GJ that McQueary had told him he had observed X would not have been true. How is that statement incorrect?