To simulate the effects of the breakup channel on rearrangement amplitudes, the conventional coupled-reaction-channel (CRC) expansion is augmented by pseudoreaction channels. The construction of the projector for the extended CRC space is discussed, and transition-operator equations on this space are given. By solving the full and post-approximation forms of the CRC equations for a model three-particle problem, the crucial role played by the nonorthogonality terms is demonstrated.