I don't care how hard someone plays or how tough they are or how great there work ethic is if they aren't getting the job done and we keep losing to the elite teams every year. If we want to stay mediocre than keep players like Millsap at the 4. But if we want to be elite like the top teams we should do what they are doing and get size like EVERY single one of the top teams have.
Sap/AJ was not a good rebounding or defensive combination. Jefferson is not a good help defender and Sap can't deal with centers pretending to be PFs. Certainly doesn't make them mediocre individual players, just not a good fit in those spots. They looked a lot better playing with Favors as he does box out much more consistently. Sap/AJ really got in trouble with teams playing 2 center sized guys for all the reasons you mentioned. You are correct that Sap is not a starting 4 on a championship team. But that's not my point.
I don't recall Sap ever saying he wouldn't play the 3. He told a reporter that he didn't want to think about going back to the bench at the time of the question, which was right after the last game. IIRC. Maybe he did say something like what you said but I don't recall it.
You seem to think that keeping Millsap requires him to play starter minutes at PF. I don't agree with that premise. 10-15 minutes at 3, 15-20 minutes at 4. As a tweener player he has to be used creatively in situations that take advantage of his strengths. In this scenario there is plenty of room between the 4-5 spots for Favors, Al, and even a rook. Assuming Sap can improve his handle and J just a little bit he will be perfectly capable of this.
Also Sap is a productive vet within the flex. Your premise regarding Bass etc.. assumes that guys will just walk on the floor and immediately produce. They wouldn't and neither will any rookie. It takes a while to get it. Losing Sap would mean very likely losing 4-7 games directly from his departure, assuming Corbin keeps that offense.
Finally Millsap is a homegrown developed player. I hate the idea of having a guy get better year after year only to throw him away when he hits his prime. Sap is much more valuable than having yet another 20 year old.