The geography just doesn't add up for putting another AAA team in the center of the country. Des Moines and Omaha are already isolated from the rest of the PCL and the IL doesn't extend west of Michigan and Indianapolis. Travel costs are a huge part of the expense of maintaining a AAA team.
IF the Twins really wanted to investigate a move of their AAA team closer to Minnesota, though, there would be options. Setting aside the fact that moving to a community that doesn't already have a AAA team means a community that currently does will lose their team (and the politics of such an event), putting a team in Dayton OH might be worth considering. Their Midwest League team drew over 8,000 fans per game last year... which is better than most IL teams did. I'm not sure how Columbus would feel about sharing their state with another AAA team, but they obviously don't compete much for the same fans at this point anyway.
All of that said, I really don't have a problem with Rochester selling Yankee merchandise. Running a minor league baseball team is usually a break-even proposition, at best. The Twins haven't done Rochester any favors lately in terms of the talent (or lack thereof) they've sent there to play. The result has been abysmal attendance, which means low ticket and merchandise sales revenue. They've got an opportunity this year, because of SWB's stadium situation, to make a few extra bucks and there's absolutely no reason, in my mind, why they shouldn't do it.
The agreement between the Twins and Rochester ends after this season. I'm sure both organizations are looking at other options and they'll both make whatever decisions are in their best interests. Neither of them owe the other any more than that.