My thoughts on Paddock are, if the Twins can get out from under his $7.5 million salary, they could then trade one of the younger AA or AAA pitchers plus something else to acquire another Lopez type pitcher who hasn't been paid yet. Lopez's made roughly $5.4 million his first season with the Twins, so by subtracting Paddock's salary and adding another Lopez type they would actually be saving money next season.
There are only so many spots in the rotation and with Lopez, Ryan, Ober and SWR all relatively young, where do you put Festa and Matthews who are almost ready. After next season Morris, Lewis, Adams, Raya, and Culpepper will all be knocking on the MLB door. Some of them won't pan out and some will move to the bullpen, but it's the FO's job to make that determination before some of these guys fizzle out as prospects.
Why not trade from a position of strength to acquire a young and cheap MLB player?