So, let's say we trade JO for a few players who have expiring contracts.
What does our salary cap status for 08-09 look like then?
This year's cap is $55.5 million, up about $2.5 million from last year.
Let's assume a similar increase say that it increases to about $58 million for next season.
According to Hoopshype (not the best source, I know) the Pacers will have $47,347,570 in salary without JO's contract on the books. This would leave us approximately $10,652,430 in cap room with 10 players under contract. Furthermore, the Pacers are currently in line to have the 12th pick in the draft last year's #12 pick (Thaddeus Young) is currently making $1,830,720. After signing our draft pick, we'd have $8,821,710 in cap room left.
Last year's top free agent signing (Rashard Lewis) is making $15.6 million this season.
To sum it all up, trading JO for expiring contracts will give us a bit of flexibility, but won't give us enough room to go after any of the top FA's next season.