It's not true that they are picking Test players from T20 - in this squad, Shan, Imam, Azhar, Yasir, Abbas never (?) played in PSL, Asad also is not considered a T20 player and had a poor PSL - in fact Hamza played in PSL and he was poor there. Babar is probably the target of most critics (from Wasim's video, I felt that), but he is truly a genuine contender for world class potential, regardless of PSL or Domestics.
Rather, I have serious issues with the players picked, despite considering FC/Domestics being substandard. It's not about T20, rather they have a full set of players to rotate from and regardless of whatever they do (or others do) in Domestics or PSL, these players won't miss out. This series, Shan seems to make it through performance (in domestics), but truth is, had Hafeez not been embarrassed by own performance (hence retired to protect his WC), Shan won't have been in SAF.
So far Ul Haq has sent 2 squads in SAF for Test & ODI - it's risky to tell about Test squad because I don't know who is genuinely unfit/fit, who faked and who scored 18.2 in YoYo bench mark, but that squad missed - a genuine opener, a middle order back-up and couple of fitter fast bowlers. May be Yasir's NZ performance forced them to consider him, otherwise Hamza could have made it.
But, that ODI squad is un-explainable - how come Saud, Amin, Umar, Amad & Leggi Irfan doesn't make the squad if we consider anything from domestics? There could be two explanations - one is AUS/WIN of that time .... so good that players like Law, Hodge, Maher, Cox, Clarke, Davies, Grey, Collis Kings, Faud Bachcuss ..... missed out their career. And, those teams weren't losing much, hence no need to change the squad - it's just that these players were unfortunate to be born in wrong time. Other explanation is IND of 2000s, or AUS of late 1970s - SRT, RD, VVS, Gambhur, Sehwag, Kumble .... or Chappells, DK, Thompson, Walters, Redpath, Hogg, Marsh, Stackpole .... played together for a decade and created a hollow - their reputation was such that, it was impossible to drop some of them for youngsters, who might have been even better than some of the stalwarts in their last leg.
But for PAK - COME ON!!!!! They are at a 1-9 run in 2018, "unceremoniously" knocked out of Asia Cup, being completely out classed by under-strength IND/BD in their adopted home, made neutral fans feel sorry for them in NZ (so, 1st explanation of AUS/WIN doesn't apply) ........ and they are denying youngsters to protect the likes of Hafeez, Malik, Imam, Sarfraz, Imad ....... as if, they are one in a generation player!!!!! I again say - COME ON!!!
I was looking through the careers of few younger players - Saud debuted in 2011, that's 7+ years back, Saad Ali in 2012, Gohar in 2013.......... how many years one needs to "mature" in domestics???