The extension wasn't offered last year after his exit interview, when we actually had the cap space to do it. Now, to do it, we'd need to renounce the MLE and BAE and get only the room exception to upgrade the bench.
And yes, personally, I'd trade him if he doesn't sign the 3-yr max, whether you think that's idiotic or not. But personally, I don't like having any chance that he walks for nothing next year, especially with some of his past comments. I know that differs with many in here, and I know that he's said different (and complimentary) things since this season turned out so well.
Maxing him out until he's 32, then seeing what happens, seems a lot less risk than paying him a blind 23-26M when he's 34.