Maybe, or so says Roch Kubatko in his blog.
If Baez does need to have TJ surgery, he'd almost certainly be out for 2008 and the Orioles would no longer have to deal with his sub-replacement level 6.44 ERA. The team has always been unable to recognize a sunk cost when they see it so there was little chance they would simply release Baez if he continued to pitch to his current level. And even in a trade with the Orioles taking on a significant portion of the money owed to Baez, there most likely would not be a line forming to acquire his services for 2008 and 2009.
That being said, Baez has only faced 233 batters this year, a relatively small number on which to judge a pitcher (or any player). If Baez could come back next season and approximate his 4.53 ERA from 2006, he'd have some value, even if that value was far below what he will be paid. A sub-0ptimal solution is sometimes a necessary evil given that Rob Bell or Victor Santos are the types of alternatives the team might be inclined to audition.
In either case, the team clearly needs to upgrade the bullpen for next season. Although Chad Bradford and Jamie Walker have both been perfectly acceptable this season, Andy MacPhail hopefully realizes the folly of throwing big money at the problem. And while scrap heap solutions can work, it's much better to acquire some young flamethrowers with big arms (Fernando Cabrera) rather than old guys long past their usefulness (Paul Shuey, Rob Bell).