You both have arrived at the correct answer for A. I also think both of your mechanisms are reasonable. I believe that the carbopalladation step will proceed to give the Pd inserting away from the R1 group (as Heory denotes). Interesting stereochemical model. The authors do not specifically say their rationale, however they also only obtain slight selectivities, ranging from 1:1 up to 4.4:1 for the syn diastereomers. After the carbopalladation reaction, R1 can be either cis or trans to the aromatic group, and I'm inferring there is a mixture.
Ok, so for the next part of the question:
When R1 is some group, say C6H13, the reaction goes as indicated above. However, when R1 is an ester, the reaction proceeds to give another product...so...what is that product and how do we arrive there?