Hmm, my understanding is that notify is the name of the callback for transferAndCall, and that transferAndCall is a replacement for approve and transferFrom.
approve and transferFrom: token canister gets called by DEX (or other) canister
transferAndCall: token canister calls DEX (or other) canister
Regardless, the main issue with notify is still cross-canister atomicity. If notify fails, the balance update made in the token canister needs to be rolled back in the same atomic transaction. I don’t think we should expect or rely on the DEX canister to refund the user.