Well yea, there's definitely been questions about his attitude in the past. I think the fact that his career was all but over has done a fair bit to humble him now though. He's actually come out and said that he's not the bad guy that he's been made out to be in the past, but there's definitely been some evidence that he was turning into a locker room cancer pre-injury in Portland. They were trying to get rid of him even before he hurt his knee.
I think the thing is that Portland aren't worried about 2010. They're worried about 2009. They want to be able to use their free agent money now, and so they should. Even besides that, Paul Allen (the owner of the Blazers), multi-millionaire or not, probably doesn't want to pay $18 million to someone if he doesn't have to, especially when he's not receiving their services at all.
Just a sidebar - the guaranteed contract situation in the NBA is pretty ridiculous IMO, especially considering Miles was judged to have a career-ending injury. At that point, he should have technically been considered retired (even if he hadn't officially done so), and his contract should have been wiped from the cap. A similar situation is happening with Eric Snow in Cleveland. He's pretty much done for, yet the $7 million or so that's on the Cavs' cap for his salary can't come off for while yet (not the whole term of the contract, but there's still an amount of time to go yet). I know that sets a dangerous precedent that could be used as a loophole by clubs to renege on bad contracts, but how many players are going to be willing to falsely be labelled with a career ending injury to have their contract voided? None I'd imagine, so that loophole wouldn't ever get used. With unguaranteed contracts, like in the NFL, you'd have to play to get paid, making these bad contracts virtually non-existent, as if someone is playing badly or can't play, you can just cut them, like in the NFL.