1--Falvine doesn't care about if a kid is from MN when they're deciding to sign, nor should they.
2--Hand had a very concerning 2020--he didn't give up a single homerun despite an under 30% GB rate, and his velocity had dropped below 92. His swinging strike rate was down to 10.5% (lowest since 2015, the last year he started games), while his contact rate was up to almost 76% (highest since 2015).
3--Those concerns have amplified in 2021; Hand has been worth only 0.2 WAR across 42 appearances, is striking out less than 9/9, while walking almost 4/9. His GB rate is improved, but still under 40%, and he's now giving up homers again, leading to a 4.3 FIP and a 4.69 xFIP. His velocity has recovered to be back over 93, but that hasn't been enough to help his swinging strike rate (lowest of his career at 7.4%) or his contact rate (above 81%.highest since 2015). And all of this is despite having a .239 BABIP, which is the lowest he's had since 2013, when he only pitched 20.2 innings, which means there's even further regression potential. Falvine were right to not give Hand $10M.
As for Pineda, I think the FO believes they can compete in 2022 if things go right, but they don't want to sacrifice competitiveness in 2023/2024 in an attempt to compete in 2022. As such, signing Pineda to eat innings next year, so you're not forced to prematurely promote Duran/Balazovic/Winder/Ryan, but can instead bring them up when they're ready is a good thing. It also raises the floor for 2022, in case things start to go right (Maeda is closer to 2020 Maeda, Rooker becomes a top 5 DH, a fully healthy Kiriloff takes a leap, Martin forces his way into the lineup a la 2019 Arraez, and a couple of other signings work out). As such, while I'm not saying Falvine WILL sign Pineda for 2/$20M, I don't think that's more than double what they would do, as you're implying.