Right now the Celts are 3-5 against teams that currently have .500 or better records. Clearly they have work to do but things aren't as dire as you're describing.
The Celtics own solid wins against Atlanta and Denver, and a miracle, last-second win against Miami.
They weren't competitive against Indiana, San Antonio, Houston, or Portland. They got blown out by Minnesota, too.
That's a small sample size. Admittedly, those results are better than what I would have predicted before the start of the season. But my impression from that group of games is that this team isn't especially competitive.
This team is still nowhere close to really competing against the best teams in the league, in my opinion. I think that'll be true even once Rondo returns. It just turns out the middle and bottom of the league are even weaker than I had expected.
I think if you added Rondo and brought in a decent center you'd be a step below the top teams but a solid playoff team. After that you'd probably want to bring in a good wing player. Considering all of the assets Danny has that's not out of the question, and you'd be at least a fringe contender.
Not sure about fringe contender. Entertaining little team, sure.
Trading for / signing a couple second tier stars (e.g. Greg Monroe and Arron Afflalo) without gutting the team seems plausible to me. That could be a fun group for a few years before it got to be too expensive to be worth it. Might even make it past the second round once or twice.