SMTP Fixup -- On or Off???

We've been experiencing some issues with receiving mail from an on-line
survey company (ZARCA). Up to a third of the messages are bounced with
the "unknown user" response. The funny thing is, there are no log
entries on our mail exchangers indicating that the bounced emails ever
hit the servers, and there are no log entries for the DSNs that are
apparently being sent back to ZARCA. After a month with dealing with
ZARCA they have yet to produce the DSNs so that we can verify where
they are coming from. There solution is to open our mail exchangers to
relay mail from their domain/mail server.

Our SPAM solution provider (Canit) says to shut off the SMTP fixup
option on our Cisco PIX 525 firewall. From what I've read on-line, a
lot of sites are turning this option off, however our network
administrator is against doing this and feels that it is a substantial
security risk.

Is shutting off the SMTP fixup option a large security risk? Larger or
smaller than opening up a relay to the ZARCA mail server?

Thanks,
Mike