Huang et al. (1987, 1989) reported hot filaments of plasma sheet origin filling the magnetospheric lobes during northward interplanetary magnetic field (IMF). On the other hand, cold plasma transients of presumably lobe origin are often observed in the plasma sheet. These features can be interpreted in terms of plasma exchange at the plasma sheet?lobe interface (PSLI) proceeding in a filamentary manner. We present a description of this process within ballooning destabilizing of the near-Earth curved segment of the PSLI. Although the basic ballooning instability condition is not typically met inside the plasma sheet, it is satisfied at this segment. The PSLI always separates the cold lobe population from the hot plasma sheet, thus providing a pressure gradient favorable for the instability; its near-Earth part has a nonnegligible magnetic curvature. A solution for the least stable ballooning harmonics is found, which satisfies the finite conductivity boundary condition in the ionosphere and the outgoing Alfvén wave condition at the tailward end of the near-Earth curved segment of the plasma sheet boundary. We show that this part of the PSLI may be a generator region launching filamentation. The background convection is imposed on the ballooning motions. The large-scale convection associated with southward IMF B z suppresses hot filament progression into the lobes, while promoting penetration of lobe transients into the plasma sheet. However, during northward IMF, the convection favors at certain magnetic local times the extension of plasma sheet filaments into the lobes and their subsequent protrusion toward noon. This process is signified in the ionosphere by the occurrence of nightside originating polar arcs. Several polar arc events are shown that develop from the nightside oval boundary into the polar cap on timescales of approximately 10?15 min, consistent with the growth rates of the studied instability.