I read this in the weekly e-mail that I receive from the Avner Institute and was amazed at how the Rebbe was able to explain very succinctly and clearly the concepts of tzaddikim not erring but doing teshuva and in general, if "these and these are words of Living G-d", how can one path be more appropriate than another:
Many years ago, a group of students visited the Rebbe. When told that the spirit of G-d spoke from the Rebbe’s throat, one of them exclaimed, “Does that mean the Rebbe never makes a mistake?”
When they entered the Rebbe’s room, one of them asked the Rebbe pointblank, “If the Rebbe never makes a mistake, why does he have an eraser on his pencil?”
The Rebbe quietly answered, “A Rebbe does not err, but today he is greater than yesterday and today he adds to what was written yesterday. In other words, it’s not in order to erase a mistake, but to erase what was correct yesterday. Today he is of a different, higher stature.”(source)
To us, this is not only a lesson in appreciation of who tzaddikim are and what their avoida is, but also in our own personal lives. We are not tzaddikim and will make mistakes. But that's not the only reason to have "erasers on our pencils". Even if something we created yesterday was good, today we can make it better.