I don't think it's strictly about cap space with them. They're still not drawing at the gate, and according to Forbes (which generally does a pretty good job with their numbers), they've lost money in each of the last 5 seasons, and lost on average $10 million per season. I think the Pacers could be convinced to take on the pro-rated portion of Ray's salary for one of their young players who's about to get paid in the offseason, and maybe an expiring salary dump like Louis Admundson. But I remember reading somewhere that the Pacers salary budget was in the $45-$50 million range, and that they had their own personal salary cap below the NBA one.
I think taking PP's contract is an unreasonable thing to guess at. Regardless of cap room, they can't afford it unless their economic situation changes suddenly and significantly.