An earlier report noted that the Blazers were sure that the Knicks would match any offer to Lee, hence why GM Kevin Pritchard decided not to attempt to sign Lee to an offer sheet, yet from what I'm hearing out in P-Town, that wasn't the case. That said, a source confirms relative interest between both the Knicks and Blazers regarding a David Lee sign and trade.
In the beginning of the summer, the Blazers target was Andre Miller, an upgrade and veteran leader the team desperately lacked at the point guard position. That was until it appeared that Hedo Turkoglu could be had. My source tells me that the team felt Turkoglu, coming off an impressive playoff, became attractive because of his "perimeter length," which has become a trend in the NBA these days.
Regarding Lee, the team was and is interested in a sign and trade, but was never interested in an offer sheet because, after Turkoglu headed north to Toronto, the team knew it could get Miller at a reasonable price. In fact, as much as Donnie Walsh is lauded for his patience, the Blazers feel that waiting out Miller was equally savvy business, feel they played their cards right and significantly upgraded at the point.
Which is to say the Blazers were never in a position to offer Lee and if they did, one would really have to wonder if the Knicks would have matched knowing what we know about 2010.
And yes, Travis Outlaw would certainly be involved in any deal, along with Steve Blake. Like Hahn said, Walsh would be wise to hold out for Rudy Fernandez, who was incensed that the team was courting Turkoglu, but now seems to be okay. Rudy is an absolute fan favorite, and the Blazers are unwilling to move him because of that and especially if they are primed to offer LaMarcus Aldridge a contract extension. But where does Rudy fit? With Miller there now and Brandon Roy there long term, the starting back court seems set. Plus the team has plenty invested in Martell Webster and I'm hearing second-year man Jerryd Bayless "is not available."
It will be interesting to see what happens as Portland is a fit for a sign and trade, but unless the Blazers are willing to move a 2010 draft pick along with Blake and Outlaw, or include Fernandez, who would thrive under Mike D'Antoni and fit the bill at the two position, a sign and trade involving Lee seems unlikely.