As time passes, our options regarding the Melo situation seem to be dwindling. While nobody can be 100% certain, it doesn't appear Carmelo is eager or willing to sign an extension with anyone but the Bulls or the Knicks. The Knicks have some tradeable assets, but would likely prefer to just wait out the year and acquire Melo in a sign and trade or as an outright free agent. Chicago could put together an interesting package involving Luol Deng and Taj Gibson, however many Stiffs balk taking on large long term contracts. Neither team has any attractive draft picks for us to rebuild with.
The question then becomes, what teams are willing to chance it and trade for an extensionless Melo? There are 3 candidates I've heard mentioned. Orlando, Dallas and Atlanta. Atlanta seems unlikely given they just threw an insane amount of money at Joe Johnson, a scorer similar to Melo. Dallas is an old team that lacks the young talent and draft picks the Nuggets are interested in. The best candidate I see is the Orlando Magic. Orlando is a small market, but the Magic have a superstar center in Dwight Howard and a willingness to spend money like a big market team (Magic have the 2nd largest payroll in the NBA). They have some interesting trade assets and a reported willingness to take a chance on Carmelo signing an extension there.
The one thing the Magic lack is an attractive draft pick. This is where a potential 3rd team could get involved. Given their ineptitude, we know the Clippers have a variety of good draft picks. Chris Kaman hasn't found his game when playing with Blake Griffin and has been a huge disappointment this year. He is also now injured again and scheduled to miss 3 weeks. They may want to move him for a more reliable defensive minded center like Marcin Gortat (who some people are very high on). Something like this could work:
LA Clippers receive: Marcin Gortat, Brandon Bass, JR Smith
The Nuggets receive a Clippers 1st round draft pick that could be potentially excellent depending on its protection, a young promising SF in Aminu (50% 3pt shooter) and a well rounded and relatively inexpensive point guard in Jameer Nelson. Jameer is known as a scoring point guard, but is underrated as a passer. He would be an excellent starting PG and would allow Lawson to come off the bench where he is more effective Kaman would likely be around only in short-term unless he regains his allstar form. JJ Reddick, while not having the most attractive contract, is a capable bench shooter that can replace some of JR's production. While Nuggets fans may not agree on whether Chauncey is in a slump or in a career decline, there is no question that Chauncey wants to close out his career playing for a contender. Not many people think Melo-less Nuggets would be a true contender, but a Melo+Dwight Magic team certainly would be.
The Magic would definitely be taking a risk that acquiring Carmelo and Chauncey would earn them a ring or at the very least put them in the Finals. As currently constructed, many doubt the Magic can advance past the Celtics. Since Hedo left, they haven't had a clutch scorer (Vince tends to disappear when needed). But if the Magic can make a deep playoff run with Carmelo, the idea of playing with friend and teammate Chauncey Billups and a possible NBA MVP center would force Melo to strongly consider signing an Orlando extension. Carmelo and Dwight would be a force in the Eastern Conference for years. Since Vince Carter and Chauncey both have team options next year, it gives the Magic the ability to free up space to sign an additional piece. This would definitely be a high risk high reward type trade for them.
For the Clippers, the pairing of Gortat and Bass with Griffin and DeAndre Jordan suddenly gives them an excellent defensive and rebounding front court with significant depth. They also add an explosive scorer off the bench in JR Smith. The draft pick would likely be protected (Top7 or Top 10 maybe) and they still keep the unprotected 2012 Minny pick which will likely be very valuable.