Well, they are not denying him a chance to earn a living. But yeah, that is why zero tolerance is tricky. Imagine if he did not have a guaranteed contract. Would one of the other 29 teams take a chance on him? Hard to say right now. If not, they would both not only be in likely financial straits but would probably not be able to remain in the US (though he'd probably wind up in Mexico or Asia).
I do think the bottom line is that he can't play, however. Last year was the year he had to show he was back. Had he not been arrested, and continued to play at the same level he had been, he was going to get moved anyway. He'd already lost his job to some extent (only started four of his last 8 games before the arrest, and this was a guy who used to never miss a start). It just would have been an easier deal to make (Phillies take back someone else's bad contract or whatever).
If he could play, I think the Phillies would be a lot more morally flexible, and certainly another team would. But the guy he's been for the past two years, both offensively and defensively, is not better than a AAAA player, and it is a lot to think that, at 28, he will ever be as good as he was when he was 25. And having not played a live baseball game for 10 months he probably need to be in the minors!
It's not impossible that Klentak and the coaching staff (most of which has been here for two seasons) just think he can't be coached, which they also decided about Franco. The irony is, having his life shaken up like this might make him more focused where simply failing at baseball did not.
It's impossible to split the hair. Had the arrest never happened maybe he'd still be on the 40. And if he hadn't collapsed completely as a player he also still would be (for one thing the Phillies wouldn't have been able to DFA him for baseball reasons).
All of which is why I still think they might release him. The dance they are doing just isn't productive in terms of either giving him a chance or trying to get him traded. At best, they see him as an unsalvageable distressed asset that someone might still be willing to acquire under different future circumstances (an injury, or the deadline market). I still think playing time is going to be hard to come by for him in AAA (Moniak is our best CF prospect and one of these AAAA guys will play there and be the first call-up). Of course he doesn't have to play CF, and maybe shouldn't.