In a perfect world, Reggie Theus wouldn't be judged by the team's won-loss record this season. He'd be judged by how well he develops the roster, both the starters (Kevin Martin, Beno Udrih) and the kids (Donté Greene, Jason Thompson, Spencer Hawes).
But even if it were a perfect world, Reggie would still coach for wins. That means plenty of Mikki Moore and Brad Miller, and plenty of John Salmons (which actually isn't a bad thing -- boost that confidence/value). In this mundane world, where it's not hard to imagine a coach's job riding on the difference between 37 and 39 wins, Theus has no choice but to fight for every victory, player development be damned.
That's why it doesn't make sense to offer Theus an extension this summer/fall. It's not going to change anything. Theus will play to win regardless, and an extra year on his contract isn't going to ensure minutes for Greene or patience with Hawes. It's just going to tie the franchise's hands an extra year, with the sincere possibility the team played over its head in 2007-08, and that Theus just doesn't mesh with the core.
Remember: Theus had to fine Mikki and Salmons after arguments. Hawes openly pushed for more minutes. Martin blew up two days after the season ended. Evidently, some other players you'd think would stand firmly in Reggie's corner were unimpressed with his rookie year.
Geoff Petrie has brushed him back (the "loquacious" quote). The Maloofs pressed him through the media to play Shelden Williams and Quincy Douby. Those parties agreed to trade Reggie's favorite player.
Far from being united behind Theus, it seems most who matter have at least at one point publicly disagreed with or feuded with the coach. That's not a good situation. If the Kings decide to wait out the season to see if he adjusts to fit in, it's a smart move. And if they switch paths next summer, it's not the end of the world. There are other potentially good coaches out there.