"Keep $1000 in the 403b, then distribute $1500 to the Roth IRA"
I would not phrase it that way. Too much room for misinterpreting it as an instruction to do a taxable rollover from the 403(b) to a Roth IRA. Consider the corrective distribution from the 403(b) to be a transaction independent of completing the rollover of the original $1,500 of basis to the Roth IRA.
Assuming that you had no other funds in traditional IRAs, your original intent appears to have been to convert the entire $2,500 to Roth, paying taxes on the $1,000 that was in excess of your $1,500 of basis. However, the rollover of that $1,000 to the 403(b) was permissible, so that portion probably must stay in the 403(b).
I had forgotten that $1,000 was rolled over to the 403(b) permissibly, so a corrected code-G 2024 Form 1099-R would show this $1,000 as the amount rolled over rather than the original $2,500 (not $0 as I said previously).
You are correct that there are many ways to make the situation worse by making inappropriate transactions. If you want to, you could probably just abandon the $1,500 of basis and leave things as they are. The IRS is unlikely to ever complain about doing that, and would be unlikely to even detect the problem without an audit.
