Melo ends up with the Knicks. Check.
Denver gets back a borderline superstar and Gallo to help them stay competitive in wide open West. They cover 85 percent of Melo's scoring and get back MUCH better defender in the process. Check.
Indiana gets huge cap relief with Curry and Granger's increasing contract, can start rebuilding with young core (Collison, Chandler, Hibbert, Randolph) Check.
I doubt Indiana would actually waive the white flag and pull the trigger on this, but they just fired their coach, a clear indication that they need to start over. Granger could become increasingly frustrated playing there and will more than likely ask for a trade next year anyway. Chad Ford's latest piece on ESPN listed him in the top 10 trade chips column, so obviously there's already some rumblings in Indiana's front office. Granger's not enough of a superstar to build a team around him, but if you add him with other good players (Lawson, Nene, Afflalo, Chauncey, et al...) he could make the Nuggs REALLY scary, and free from all of the distractions.