Free was horrible last year, no doubt about it. But, lets not pretend that he has no talent at all. And has no upside at all.
If you can get Free to take a salary cut, that keeps his salary at a level that is acceptable for a quality backup then a restructured salary (via salary cut), would be MUCH MUCH better than out right cutting him. You keep your swing tackle in case Tyron Smith gets hurt, you keep from opening up another hole on a roster that has more than enough holes as it is, and you keep deadweight from cutting him from hanging over your head next year as well.