Yes, that’s precisely why the room MLE exists (there’s room under the cap).
However, that exception cannot be combined with capspace for a larger salary. They are partitioned. Which is why the room exception should be called the Alex Caruso exception.
So we could end up with 3 solid rotation players if we split the $17 million from Favors on a couple of guys and then use the room MLE. I think that's the way we should go, especially since we still need to add more shooting and depth to the roster.