In the scenario I described, they would essentially shed everyone but Dirk, cut Pierce, and have enough cap space to sign Howard and Paul.
I think they'd have to do a bit more than that to get room for Paul and Howard, but I agree they'd do that trade for Pierce. They would have to release Dirk with the stretch position and have him re-sign for the minimum. But Dirk has openly talked about adjusting his contract to make room for players, so I think he's on board with this plan.
Can they do that? Use the stretch provision and then re-sign their own player? Is that allowed?
That is a pretty cool workaround on the salary cap if so.
I made that idea up myself, but I checked all through Larry Coon's FAQ, and I couldn't find a rule that said you couldn't. In a fan post that's been delayed due to the Garnett-Doc issue, I was going to suggest that as an option for us with Pierce, so that we save on cap space for next season in order to bring in better players, while keeping goodwill with Pierce so that he's wiling to sign for the minimum (since he'll still be getting paid his full salary). It wasn't necessarily going to be my recommended option, due to the long-term inflexibility that would create, but I think this loophole is available for teams to use until they probably close it in the next CBA.
Also, the more I think about the Pierce deal, the more I'm okay with it, as the logical option for us is to flip some of the picks we get from it and the Doc deal, along with the expirings, to Atlanta for Smith in a sign-and-trade. Jordan, Smith, and maybe one pick still wouldn't be a terrible end-game. I'd prefer other options, but I could live with that.