No... I think I understand it just as it was made on the rev2 eval board of ADuC812.
You have a reset trigger and a jumper between PSEN and ground.
You place the jumper. Press reset (pulling it high for a moment, then releasing to low again) You're in ISP mode. You can remove the jumper (release the hardware conditions) or leave it there, doesn't matter, you're in ISP and until next reset/power cycle the system doesnt't care what you do with PSEN. It tests PSEN only when Reset pin goes down. If you want your program to run, remove the jumper and press reset.

So:
The hardware conditions are sampled at reset signal falling edge, thus they can be released at any time when reset input is low.
Or at any time when the reset is high for that matter, you can do whatever you wish with PSEN and it doesn't change a thing.

Take a "truth table plus edges":
(Reset=0 - released, =1 pilled up.
PSEN=0 - pulled down, =1 - released)

Reset:          PSEN:                  Result:
0 or 1          0 or 1 or / or        no change
/               0 or 1 or / or        MCU enters reset state
               0                      MCU enters ISP
               1                      MCU enters normal operation
               / or                  Undefined.