Will it really work that way? As far as I have understood the oyster
system, the fare is calculated between the touch-in and the touch-out
point, and touches in between will be ignored. So in that particular
case, as the touch-in is before 10:00, the higher price will be charged.
The only chance to take advantage of this is to break the journey into
two separate journeys - which is not that easy as Euston is an open
interchange.

I'm a bit confused by where you've got 10:00 from, and what you mean
by Euston being an "open interchange". Nevertheless I'll attempt to
pad out the scenario that Paul was outlining...

Sorry, the 10:00 was a typo, should have been 19:00. And by "open
interchange" I meant an out of station (need to go through barriers)
interchange.

Touch-in at South Kenton at 18:15 for the 18:21 London Overground
train to Euston. Arrive at Euston at 18:50. This part of the journey
will be charged at the 'discount' Oyster fare of £2, not the
'standard' fare of £2.50, because of the special arrangement on the
Watford - Euston line that means the cheaper fare is in force in this
direction (towards Euston) from 0930 onwards on weekdays.

Thus far, the Oyster system considers one to be on a 'discount' fare.
If the passenger then enters the LU network at Euston (or Euston
Square, as it is a valid out-of-station interchange with Euston UIVMM)
for an onward journey to somewhere else - for argument's sake let's
say it is somewhere within zones 1 to 4 - before 1900 then the Oyster
system will revert to charging them a full fare of £2.50 for the
through journey when they exit the system and finish their journey.

If however they wait around in Euston for a few minutes (perhaps
counting how many pigeons are actually inside the building) then enter
the LU network after 1900 the Oyster system will still regard them as
travelling on a 'discount' fare and will only charge them £2 when they
exit the system and finish the journey.

Yes, that's what Paul said. But this would mean that the time of the
interchange would be taken into account when calculating the fare. As
this is against the usual way of calculating PAYG fares I have some
doubts that it really works that way. Maybe Paul could be so kind and
recheck this?

Anyway, next year we will see how it really works.