The stupid thing about this is that the Knicks would be happy to pay Lin 8 mil a year and were fine matching the first contract. You never make public statements about matching like that. It just inspired the rockets to rethink the contract and make it even worse for the Knicks.
The Knicks could have locked Lin up before he got an offer too. He'll be better on the rockets and might get lucky and be able to run the pick and roll with D12. I have no doubts he will be worth his salary, this just shows me why if your a capped team you really don't want to open yourself to offer sheets, because they will be structured to make your payroll hurt!