The question is, who plays PG? If they pull this off, it would then create the "space exception", so they can sign someone for I believe $2.5 million, even after they hit the cap. And depending on the size of Chandler's contract (and perhaps he would take a small discount in NY), they could make a bid on a guy like Baron Davis if he is Amnestied.
But again, the thing to take away from this is that it would take the Knicks out of the running for Paul as a free agent next summer, and really makes the only remaining threat to the C's (at least IMO) the Clippers. And who goes to the Clippers for a paycut?