I really think they should just wait this out. There's not a large market out there right now and the C's may be very pleasantly surprised about what they get him at.
While it's not my money, I wouldn't blame the C's for not matching a contract much more than a few million dollars. The simple facts are that KG, Perk, and Wallace are all going to play somewhere around 30 mpg. There's only 96 mpg between the 2 4/5 positions. While Baby would be nice for depth, he's not going to play much next year.
And while I think it's a gamble to some degree, if Powe does recover, I don't think we'd be much worse off letting Scal be the 4th big man until Powe comes back.
In my opinion, Davis coming back here may be the worst thing for him, particularly if it's only a 1-2 year deal. Unless there's an injury, he's not going to play much and he's certainly not going to have the minutes to improve his value for next year or the year after.