It's do-able, but in order to do it, the team would have to essentially let every free agent go over the next two seasons. So, Frye, Diogu, LaFrentz, Outlaw and Blake would have to be let go (which means not trading LeFrentz for talent) as their contracts expire. And no new contracts could be added unless they expire in 2010.
None of those players are damaging losses except for Outlaw, but it's a big gamble. Paring the roster down to only players who are on rookie deals (and Przybilla) would weaken the team considerably next year. If the team didn't sign James (or another plum free agent), they'd have wasted a year of possible contention for nothing and perhaps have lost ground for the future years.