Other people who have trained in senshido longer than I have will probably have much more to say about it, but in my opinion The Shredder is such a shock to an opponent that the person trying to apply it can become too dependent upon it. They basically get tunnel vision and want to apply it in situations where you are completely out of range. (I am saying this because I have gotten that tunnel vision myself.)
If you try to Shred someone at the wrong distance (extended arm range or farther)it offers an opponent the opportunity to defend.
To me, the most complicated part of the whole thing is getting to that very close in Shredding range.
That's where the psychological part of what you were mentioning comes into play. I agree, that's very fascinating all by itself.