Honestly, I think the unraveling of KP's master plan was when Miles got signed by MEM (in addition to the cap not going up as high as thought, leading to the CBA being reworked a year later), and it took our "Imaginary Cap Space" from about 22M (at one point, 32M) to about 12-13M. That Hedo didn't want, Millsap tried to take, Ariza had already signed and Miller eventually accepted.
Here's the BrianFromWA guess on the conspiracy theory:
K*be had his "Trade Me!" summer in 2007 (in fact, West
agreed to trade him to the Piston for Rip, Prince and a #1--K*be used his no-trade clause to nix it), about the time that Oden was drafted.
KP decided to set up the Z-bo trade and dumped Franchise. Miles was well on his way to a disability ruling, RLEC was already in effect (though it wasn't the RL "Super" EC until insurance kicked in in 2008) and the projections were sunny for up to $32M in cap room (assuming that Outlaw and Webster and Frye would be renounced). Oden hadn't yet had his preventative microfracture surgery.
I think that KP was setting up to go hard after K*be in 2009, when he had his ETO available. The plan would be, from 2009-onward, a core of K*be/Roy/LMA/Oden and another 10M or so for whichever of Iverson/Andre Miller/Kidd/Crawford/other PG-ish type there was going to be and to fill out the bench (which at the time consisted of Jack/Sergio, Rudy, Przy).
Now, hindsight would make you think "hm...if you would have drafted Durant and kept Z-bo, could you have offered RLEC, fresh-off-Rookie-of-the-Year Roy, Outlaw and some draft picks for K*be in the summer LA traded him to DET?" Jack (or Blake)/K*be/Durant/Z-bo/LMA(or Przy) might have been pretty formidable from 2007-now.
Alas, Miles got put back on the books, MEM decided to trade Pau to LAL for pennies on the dollar, the cap number went down, and LAL made the Finals two years in a row before free agency 2009, Oden had been injured (twice). Roy had become an All-Star but K*be was happily ensconced in LA for life.
Agree with El Pres that, by trade deadline Feb 2009, he should've known what he was going to be able to do in FA. The trade rumor of Vince Carter, Mo Ager and the 2011 GSW lotto pick owned by NJN (which ended up being the 3rd pick in the 2011 draft) for RLEC and Outlaw (or Frye, depending on which rumor) would've helped the Blazers both that playoff year and going forward.
EDIT: had not read the debate on the "Playoff Thread Monster" before this. Sorry to rehash some points.