Alot of people are voting Psyshock off the island, I made a post earlier with my argument of why I think Hidden Power [Fire] is better and many people would have missed it, so I'll just quote it now:
It's also worth noting that Hidden Power [Fire] is a guarenteed OHKO on 0/4 Breloom after Stealth Rock / Sandstorm and Draco Meteor is a guarenteed OHKO without any prior damage. Which is unreliable, but if you want to argue unreliability; Psyshock has a very, very low chance of OHKOing 252/0 Amoonguss without Stealth Rock, and alot of Amoonguss carry at least some Defense investment. And finally, CM keldeo can never sweep us due to Terrakion (and we'll lose Latias if they're using KeldTar anyway), I think the pros I listed for Hidden Power [Fire] outweigh Keldeo and the very rare Amoonguss being more threatening, but I can see why many people would like Psyshock :)
I do see where you're coming from, and I took what you originally said into account when I made my suggestion. As Superpowerdude said we are not generally going to be winning the weather war against Rain, unless we somehow get Tyranitar in on a weakened Specs/Scarf Politoed locked into something like Ice Beam that we can Pursuit, or if the opponent just isn't all that great, in which case it won't matter. Because of that I don't really find that HP Fire would be all that useful. Granted Ferro could just set up on Latias then, but really you don't want to stay in with Latias against Ferrothorn in the rain ever, unless you're SubCM. In this case we'd be better off switching into Gliscor to take the Gyro/TWave/Leech Seed or hazards and then Taunt, Taunt >>> Toxic really as it helps the team a lot more.
I hadn't really taken Amoonguss into consideration when suggesting Psyshock, but thats definitely an added bonus. Dealing anything upwards of 70% is a win to that cause I would say as we do have plenty on the team that can adequately weaken Amoonguss to that ~35% area before it switches, allowing Latias to KO when it comes in. Psyshock also provides a secondary STAB option which we could effectively spam late game if need be, with no bad side effects. It also does mean that Latias can pick off weakened Chanseys/Blisseys, which doesn't add much to the team as plenty of other members can already do this, but its nice all the same.
As mentioned by Superpowerdude, and rebutted by yourself, Keldeo can also be a problem for the team. Be it Scarf or CM either could cause problems given not too uncommon scenarios. Basically we are relying on Terrakion to check it, so what if its Scarfed and not running an HP which lowers its speed, dumb I know but it could happen, and we lose the speed tie? Granted Scarf doesn't have the power to outright sweep the remainder of the team, but it would put unfixable dents into the team, allowing for something else to clean up whats left. If it was a CM Keldeo that also had a Sub up, whether it ran Sub itself or was passed it, similar to our strategy, that could also pose problems for Terrakion, as it would have to switch in on either the CM or attack, break the sub and get KO'd. Latias with Psyshock doesn't give two fucks about Keldeo, which I find truly invaluable so I think it definitely should be considered.
Those are probably the main reasons I'd say Psyshock > HP-Fire, although I guess I may be a little biased from personal preference, however I honestly believe it benefits the team more.
Finally i think Earthqauke>Rock Slide/Stone Edge is a good change on Terrakion. This is because i really miss out on hitting Jirachi super effectively. A Choice Scarf Jirachi can be quite annoying for our team to face, nailing Gliscor with Ice Punch and being able to hit Tyranitar and Latias super effectively with U-turn while gaining momentum is quite annoying. Jirachi can also Trick his Choice Scarf to effectively cripple Keldeo or Gliscor, two key members to our teams strategy. With Earthqauke our Terrakion can outspeed and ko Jirachi by hitting it super effectively.
I think its definitely an option, I would probably say get rid of Rock Slide, even though I love the extra accuracy, it sucks when you leave an Alakazam on 4% and then it OHKOs you back, so I'd say take the lesser accuracy for the more power in this situation. Heck there aren't all that many things that X-Scissor will be too useful on, unless I am right in my forecast that Celebi will see an increase in usage once Genesect goes, so that would also potentially be replaced, as we can just Stone Edge a lot of the things you'd use it on (Espeon, Lati@s). I know X-Scissor is much more preferable, but we could get by without it, only if it was deemed necessary to double up on Rock STAB to ensure we get those attacks to hit to prevent say a Thundurus-T/Tornadus-T sweep.