-He draws four cards due to Avenger being a 3/3 and PSZ resolves as a 2/2 and gets 3 counters
-He draws two cards due to Avenger being a 3/3 and PSZ resolves as a 2/2 and gets 3 counters
-PSZ dies before her trigger resolves and he draws no cards
The way we resolved it is the second one due to the fact that she enters with the counter and draws as a trigger.
You have two chances to respond with Decree to affect the number of cards drawn: in response to casting Zegana, or in response to her Draw trigger. You cannot respond to her getting counters, as she enters the battlefield with those counters, so the third option is incorrect.
However, Decree of Pain will NOT affect any creature that enters the battlefield after it resolves.
So if you respond to the PSZ, the Avenger becomes a 3/3, and Zegana enters as a 4/4 (3 +1/+1 counters) and your opponent draws 4 cards.
You can also respond to the draw trigger, in which case Avenger is a 5/5 as Zegana enters. She'll enter as a 6/6 (5 +1/+1 counters), and you then Cycle the Decree to reduce Zegana to a 4/4, and your opponent draws four cards.
Oh wow that is interesting I did not see it that way at all. I thought the -2/-2 was a lasting effect until EoT. Fair enough, I still lost that game so I don't feel too bad
The -2/-2 is a lasting effect until EoT, but it only applies to those creatures that are in play at the moment the ability resolves.
Think of it more like "Until end of turn, each creature that is *currently* in play gets -2/-2"
rather than "Until end of turn, every creature, including those who have not yet entered the battlefield but will later this turn, get -2/-2"