Does that mean that I can use her to cast lab rats from my graveyard and pay the by back cost and thus return the lab rats to my hand instead of exiling it?
Yes, you can cast Lab Rats for its buyback cost. This is notably because Kess's second ability doesn't say that the card in question is cast "without paying its mana cost" or for another cost "rather than" the mana cost. Thus, that ability doesn't affect any—
additional costs, such as buyback (C.R. 702.26a), or
alternative costs,
that may or must be paid for that spell. (To be clear, you must still pay all the costs of a spell you cast this way with Kess, including the mana cost if no alternative costs are available.)
And yes, you can choose to apply the buyback effect to Lab Rats as that spell resolves to put that card into your hand rather than your graveyard, if Lab Rats's buyback cost was paid (C.R. 702.26a). This is because two replacement effects (here, Kess and buyback) would be affecting where that spell would go, and the spell's controller (in general, you, here) would choose which effect to apply (C.R. 616.1, 616.1d). Note, however, that unlike buyback, Kess's replacement applies if the spell would go to your graveyard by any means, not just by resolving, so that, for example, if Lab Rats is countered, Kess will send it to exile rather than your graveyard and buyback won't affect that. (To be clear, neither buyback nor Kess's replacement is a self-replacement effect; see also this thread.)
EDIT: Edited for clarification and/or correctness after comment 3 was posted.
Your terminogy is off. Alternative costs are costs you pay instead of the normal casting cost such as overloard. While buyback is an additional cost that you pay in addition to the casting cost.
Kess allows alternative costs because it isn't using its own alternative cost to cast from the graveyard such as flashback. It is simply granting permission to cast from an unusual place. Because there is no restriction on this permission; you are free to apply an alternative or additional costs.
A few more questions on Kess, Dissident Mage for clarity. I can play alternate costs, however I cannot pay cycling or transmute costs on instance and sorceries in graveyard with Kess because part of that cost is to discard the card, which cannot be done from the graveyard.
A few more questions on Kess, Dissident Mage for clarity. I can play alternate costs, however I cannot pay cycling or transmute costs on instance and sorceries in graveyard with Kess because part of that cost is to discard the card, which cannot be done from the graveyard.
Well kind of. You can't pay the cycling or transmute costs because part of the cost is to discard the card which you cannot do as it's in the GY as you mentioned. In addition to that Kess only gives you permission to 'cast' a card not activate abilities of a card so even if you could find some way to pay you wouldn't be able to do it.
You don't cycle while casting a card, you don't transmute while casting a card. Cycling is an activated ability which you activate from the hand, same with transmute. There is no casting, there is no spell.
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Does that mean that I can use her to cast lab rats from my graveyard and pay the by back cost and thus return the lab rats to my hand instead of exiling it?
And yes, you can choose to apply the buyback effect to Lab Rats as that spell resolves to put that card into your hand rather than your graveyard, if Lab Rats's buyback cost was paid (C.R. 702.26a). This is because two replacement effects (here, Kess and buyback) would be affecting where that spell would go, and the spell's controller (in general, you, here) would choose which effect to apply (C.R. 616.1, 616.1d). Note, however, that unlike buyback, Kess's replacement applies if the spell would go to your graveyard by any means, not just by resolving, so that, for example, if Lab Rats is countered, Kess will send it to exile rather than your graveyard and buyback won't affect that. (To be clear, neither buyback nor Kess's replacement is a self-replacement effect; see also this thread.)
EDIT: Edited for clarification and/or correctness after comment 3 was posted.
Kess allows alternative costs because it isn't using its own alternative cost to cast from the graveyard such as flashback. It is simply granting permission to cast from an unusual place. Because there is no restriction on this permission; you are free to apply an alternative or additional costs.
A few more questions on Kess, Dissident Mage for clarity. I can play alternate costs, however I cannot pay cycling or transmute costs on instance and sorceries in graveyard with Kess because part of that cost is to discard the card, which cannot be done from the graveyard.
So if I have Raking Claws and Clutch of the Undercity in my graveyard I can play either cards with Kess, but I cannot use their cycle/transmute abilities when casting them from the graveyard with Kess, Dissident Mage
Well kind of. You can't pay the cycling or transmute costs because part of the cost is to discard the card which you cannot do as it's in the GY as you mentioned. In addition to that Kess only gives you permission to 'cast' a card not activate abilities of a card so even if you could find some way to pay you wouldn't be able to do it.
You don't cycle while casting a card, you don't transmute while casting a card. Cycling is an activated ability which you activate from the hand, same with transmute. There is no casting, there is no spell.
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