"SAR people will tell you how hard it is to find a dog with the drive for SAR, and service dog trainers and handlers will tell you how hard it is to find a dog with the temperament to be a service dog. Personally, I think you'll have a very hard time breeding for both of those."
why? we've done it with guide dogs, SAR and RCMP dogs coming from the same litter - genetics .
I don't think it's impossible, but I think it would be difficult for an inexperienced breeder to reliably turn out dogs who are suitable for both purposes, even with good mentors (particularly if the mentor didn't know much about psychiatric service dogs). The temperament and drive you look for in each is very different. I know that some bloodlines can be very versatile, but from my experience with both, it seems like you're breeding for nearly opposite temperaments if your goal is to produce PSDs and SAR dogs.
Also, psychiatric service dogs and guide dogs are kind of different, and some of those differences make GSDs overall somewhat less suitable IMO. One of the big ones is the protective aspect, as the OP's own quoted description noted. Psychiatric service dogs, especially ones for people with PTSD, may have to assist in keeping others away and "guarding" their owner during anxiety attacks--but it isn't really guarding, the dog can't be aggressive or dangerous to well-meaning but ignorant bystanders during this. Because of this, I've met some people who train psychiatric service dogs won't accept breeds known for guarding, including GSDs.
The other issue is one of physical and mental activity. Guide dogs tend to get a lot of exercise throughout the day. It's not necessarily high-energy work, but it's constant. A psychiatric service dog may have a very different life, especially one for a young child or for a veteran who may be suffering from physical injury as well as mental trauma. I've seen more than one psych dog placed with an owner who is confined to a hospital for months while going through physical rehab. The dog's job is mostly to chill out with the veteran and provide emotional support. Further, people suffering from severe mental illness may be largely confined to their homes even with a service dog, due to fear, anxiety, depression, etc. The dog helps with that, but it still may take time for the owner to gain enough confidence to have an active life outside the home.
Don't get me wrong, I don't think GSDs are unable to be psychiatric service dogs and I have even met one who was very good at his job. I also know that in any given litter, you're going to have a variety of different temperaments regardless of their breeding. I just think the OP needs to be realistic about the drawbacks of this particular breed for this particular job overall.
And this isn't a knock on GSDs either. My other favorite breed, ACDs, are also largely unsuitable as psychiatric service dogs because of this as well, and for largely the same reasons (guarding instinct, significant exercise requirements). My service dog is Scooter, my ACD/BC cross, who I trained for it while I was dealing with PTSD after a violent crime was committed against me. But, he's also a very unusual dog and not at all like most ACDs and mixes I know. So I'm not even saying that it's impossible to find suitable dogs from a breed that is generally unsuitable, but since the OP has some hurdles here, I think she needs to be really realistic and careful about the potential problems with her plan.
I also don't want to discourage her from pursuing it though. We need more support and awareness of psychiatric service dogs and I'll support anyone who wants to try to help. I just think she needs to be very cautious and probably spend more time learning about breeding before she jumps in headfirst.