Yeah, that's not news. You can use signature spell on Elemental Zone or Elemental Annihilation Wave to counter any elemental spell, and signature Fear/Charm/Soothe/… can counter any mental spell with these abilities.
You don't need to identify a spell to counter it even, as you know the traits of spells as they're cast, i.e. you know when a spell has a matching trait to trigger one of your abilities, just like Fighters get to know that someone used an ability with the manipulate trait.
Furthermore, Elemental Counter does not trigger on an elemental spell being cast, but by a save or attack roll. That means you can also use Elemental Counter on subsequent rounds to counter that spell, e.g. counteracting Entangling Flora on its second round.
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This time the bolded sentence works highly problematically as rules text. You cast your fireball; I expend mi- Wait, I don't know fireball! The only party casting "the triggering spell" is your opponent, and thus, in my reading, you lose a spell slot as if you had cast your opponent's spell. You'd need to have a valid countering spell available at that rank/slot, as per the respective requirements of Elemental Counter and Counter Thought.
This part is over-worded IMO, but the important part is the sentence before:
You expend one of your spell slots to counter the triggering creature's casting of a spell with the mental trait.
What you're doing here is spending a spell slot to cast a counter. You get to pick the rank of the spell slot. It does not have to match the caster exactly. Like if they're casting an 8th rank spell, you can attempt to counter it with anything from 5-10th rank (anything lower than 5th can't possibly succeed). Ideally you want to use a 7th if you can because that's the lowest expense with decent odds, or a 9th+ if you REALLY want to counter it.
- Quick recognition or a similar ability would not be needed to counter at an appropriate rank because there is no guesswork involved by the PC. You automatically match their spell slot expenditure.
For regular old Counterspell this is true. You automatically recognize the spell with no check and no action because you have it prepared/in your repertoire (as appropriate).
It gets weird for other ones. Clever Counterspell explicitly requires Quick Recognition as a prerequisite, but the other two don't and it's not super clear to me how they're supposed to work if you don't recognize the spell being cast. Can you even respond to the trigger in that case? Or do you just know you can react to it even if you don't know why? This requires gaining knowledge that normally requires a skill check to get automatically because you effectively have to know somethin about the spell being cast in order to attempt to counter it.
I'm not aware of anywhere the rules actually spell this one out. Could be a good FAQ candidate.
- A spontaneous Arcane or Primal caster who knows Elemental Zone as a signature spell is able to counteract any Fire, Water, Earth, Metal, wood, or Plant spell as long as they have a spell slot of the appropriate rank. Likewise, a Psychic with any signature mental spell is ready to do the same against mental spells.
Pretty much, except for the question about if they recognize it or not in order to be able to do so.
- A 15th level Wizard with Whirlpool prepared but no 1st rank water spells couldn't counteract a measly 1st rank Dehydrate.
They can if they have Clever Counterspell. At that point they just need Dehyrade in their spell book and another spell with a matching trait (or an opposing one if the GM lets you do that, which IMO they should because it's thematic).
I have a different reading than you do here. I think you've left out the far more important sentence of Counter Thought, which is one one that comes right after your quote.You expend one of your spell slots to counter the triggering creature's casting of a spell with the mental trait.You lose your spell slot as if you had cast the triggering spell.emphasis mine
Well, that's a problem, because one sentence says you expend a spell slot, and the next one says you lose a spell slot. You can't do both of those literally because that's two spell slots.
I think the order matters here:
1. It says you expend a spell slot. Normally when expending spell slots you get to pick what slot you're using. This doesn't say you don't get to pick.
2. It then says you lose your slot as if you had cast the triggering spell.
Presumably #2 is talking about the slot you expended in #1, otherwise you're spending two slots to counter one and that's so bad it might as well not exist.
Then it says "as if you had cast the triggering spell". That means the spell slot you expended acts as if you had done that, not that you MUST match it exactly. You likely can't match the actual spell after all, so why do you have to match the rank?
The trigger for the Counter Thought reaction is "A creature Casts a Spell with the mental trait." So when Counter thought says "You lose your spell slot as if you had cast the triggering spell, that means your opponent's spell IMO. Let's use your 8th rank spell example.
Example:
An opponent that you can see casts the 8th rank mental spell Uncontrollable Dance. This triggers Counter Thought. I don't think a psychic could, as you say, sacrifice any spell slot of rank 5th through 10th because a 5th-7th rank spell slot cannot be used to cast Uncontrollable Dance. Spending a 7th rank spell slot would not be losing your spell slot "as if you can cast the triggering spell".
Here's how I read it: You expend a 7th rank spell, which then acts as if you cast the triggering spell so you can counter it. It'd still be at 7th rank for the counteract because that's how the Counteract rules work.
It doesn't say you have to match the rank, and you already don't have to actually match the spell. If you do have to match the rank and you're out of 8th rank slots, are you just no longer allowed to counter it even though per the counteract rules a 7th rank effect can do that just fine?
That doesn't make any sense to me as an outcome.
It's worded weirdly, but I agree as well: you can choose whatever rank spell-slot you have (from which you can cast a fitting elemental/mental spell), regardless of which spell was actually cast – you don't even need to know which spell was actually cast. So you can absolutely use a 7th-rank Paralyze to try to counter 8th-rank Uncontrollable Dance.