This is correct, they would lose cap room next year.
He's going to stay on the team, the question is what role should he have. I'd like to see Zylstra, but I'm also not in practice seeing what he is capable of.
It should be noted - Treadwell did catch a TD on a decent route where he found the soft spot in the zone. It's clear Cousins likes him too. It's a busted pick regardless, but he is a natural outside receiver that allows Thielen to be in the slot. I'm not sure Zylstra is anything but a slot guy.
Treadwell's role going forward should be #4 or 5 WR. Hell, maybe even deactivated over half the time.