I'm a little burned out on the "potential" thing. How many times did we hear that about Travis Outlaw? Martell Webster? Sergio Rodriguez? Rudy Fernandez? Sure I'd rather have an identical player who is younger. But I'm not willing to drastically overpay an inferior player just because he is younger. Young players who are stud difference makers show glimpses as a rookie, it didn't take Lebron or Durant years to become studs, they were that way right out of the gate. LaMarcus was a solid #2 option in his second season. Sure other young guys could improve, but after a few years if it hasn't happened you're hoping for a great role player not a franchise building block.
Crawford, Wallace, Felton, and Camby will all be free agents, but unlike Batum they will all be unrestricted. We are going to want a new PG and C. I think it's much more likely we need an extra $2million to bring in a starter at one of those positions then it would be to overpay Batum now when we have rights to match any offer he receives anyways.
Just because something bad could possibly happen doesn't mean we should do a less bad decision now. Also, if Batum gets a huge RFA offer that likely means he is playing well this season and we have a great player to build around, so that isn't such a horrible scenario.
What if we give Batum a big extension now and he plays like he has his entire career for the rest of the season? Maybe he wouldn't get more then the $5million MLE? Then we would've overpaid him and lost the flexability to add a free agent.