I think some people are missing the forest for the trees on this deal, seduced by the fantasy that 'Melo was going to be available as a FA this off season (he never REALLY was) or that Denver would ever accept a lopsided deal in the Knicks favor (they would not).
Some factors to consider:
1.) This wasn't last season and it isn't the 2012 off season. The uncertainly of the CBA and 'Melo's unique position IS a significant factor, always has been. There isn't a NBA writer who's provided ANY indication during this entire process that the extension hasn't been a top priority since day 1.
We can rationalize all we like that Anthony MIGHT not lose that much if he goes to free agency, and that there probably won't be a franchise tag, or that he should be willing to accept less ala the Miami guys, but this is just fan wish-listing.
It's never been a realistic option.
Knock 'Melo for that if you want, but still you have to eliminate free agency as a legitimate option open to the Knicks in any fair evaluation of the true options open to the Knicks.
2.) Denver could never accept what would essentially be a Chandler (a young yes but third tier, immediate RFA with questionable injury history) for Anthony swap, no matter how much "leverage" the Knicks held and Anthony exerted. This was always a fan-fantasy that was never going to occur.
3.) Chauncey Billups has been outplaying Raymond Felton for going on 3 months now. Yes, he's older, and not the same penetrating player (Melo takes over the break-the-defense-down guy anyway), but he HAS been running the league's highest scoring offense and shooting the ball from the perimeter with ridiculous accuracy since December (look up his splits).
And his contract (if extended) does NOT prohibit the Knicks from signing other players next off season (Knicks wouldn't have had any space with Felton either) and in fact will serve as a larger expiring NEXT off season than Felton would have.
If Knicks see a path to Williams or Paul (which would be entirely different situations than 'Melo because they can't sign extensions before the new CBA, they'll have more leverage to be traded to where they want), then Billups serves as a full-on cap matching expiring).
Mosgov/Douglas/Turiaf (expiring)/Billups (expiring) for Paul/Okafor a year from now? Just throwing it out there...
4.) Chandler (who was earmarked gone anyway) + Gallinari or Fields for Anthony is entirely equitable and if you look what the Nets were willing to give up and project what other teams might had the playing field be open, is not that steep a price.
5.) This deal, like the Stoudemire deal, is part of a larger whole, and ALSO has to be evaluated as PART of a process.
Stoudemire puts the Knicks first in line for 'Melo. Does 'Melo put them at the top of the conversation fro the 2012 class?
This deal, if it goes down, ALSO immediately creates two roster spaces - three if the Knicks let Mason Jr. go now that he's not needed for cap filler in a deal. And it looks like there may be a strong market of players who may be bought out after the deadline (Murphy, Hamilton?)
Knicks will likely be in position to add players that will make them deeper going into the playoffs.
Plus there is Azubuike. If he's not also in the deal he may also be used to bring in a player for a team looking for a expiring and cap relief, or who knows, perhaps with a whole year of recovery, the Knicks can bring him back next year (they have his Bird Rights remember and if the deal goes down, won't need his cap space).
Either way if the deal goes down as reported, the Knicks roster won't be "gutted". I'm not sure where anyone is coming from with that.
Yes, it would be GREAT to fantasize about Gallinari (or Chandler) being the Knicks' perennial '6th man of year' guy off the bench, but if this boils down to Chandler and Gallinari OR 'Melo extends with Denver or goes to the Nets, I don't know how you don't make that deal.