Georeference question

This question is more out of curiosity. I have been using the manual georeference image feature with very good results. This feature is REALLY excellent for tax maps, sketches, etc. When an image is georeferenced, does GM do a "best fit and leave the image untouched? OR, does it perform "rubber-sheeting" of the image. If it is rubber-sheeted, when the image is opened in photoshop is it the same as the original, or has it been permanently altered by GM? Sorry for the rambling question.
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Thanks,
Mike
Global Mapper Support
support@globalmapper.com