Atlanta was a pretty good team last year. They had the second best DRTG in the league, and defense generally rules in the playoffs. (I can't seem to remember who had the best DRTG last year.) They beat a pretty good Celtics team, and made it to the second round, where they lost to the eventual Champions. Their biggest mistake, IMO, is thinking that Dwight Howard could put them over the top.
This is going to be a costly move for Atlanta - especially if they knock themselves out of the playoffs. Home playoff games mean big profits for a team. I don't know about today, but not too many years ago, the Spurs' operations didn't really become profitable until the playoffs, and an early exit was a big financial loss for them. The difference between even a second round exit and not making the playoffs is just a whole load of money.
The personnel cost could be a lot worse. Rebuilding is one thing. Just blowing a team up is something else. Philadelphia tried to dismantle and stockpile draft picks, and they are in a world of hurt. You could argue that they've been stupid along the way. But look what happened to Dallas. They had 11 straight 50+ win seasons in a row. Then Cuban blew it up, and they have been crap ever since.
I agree with you that it's better to sell high than to sell low - obviously. But if you didn't make the move(s) in the offseason, it's better to stay the course than to have a fire sale. It's a lot easier to keep players than to get them to change teams. If Atlanta gets rid of all or even most of the players they're shopping right now, they will be at least 5 years recovering.

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) They beat a pretty good Celtics team, and made it to the second round, where they lost to the eventual Champions. Their biggest mistake, IMO, is thinking that Dwight Howard could put them over the top.