I honestly don't know if the team should go fire sale re-build, half-measures re-build, or attempt to "re-tool" (whatever that means in reality). But what's obvious to me is that the next couple steps remains the same regardless. Fire Laviolette, play the kids, and move out the UFAs that aren't sticking around (starting with Eller and Johansson, possibly followed by Sheary, Hathaway, and whatever D they aren't going to sign).
The fastest way back to contention, and realistically the only way this team contends again before Ovechkin retires, is if the assets the organization already has in house can step up big time and become players in key roles at a high level. The only way to find out if they're going to do that is to put them in positions to succeed and prioritize their short-term development. Not just Protas and Fehervary, but guys like Alexeyev, Lapierre, McMichael, and Iorio as well. These players may not have what it takes, particularly not in the next 1-2 years, and in which case it would make sense to invest in a longer-term rebuild. But step 1 is to remove the coach who refuses to prioritize these types of players, remove the roadblocks from them seeing ice time, and make lemonade with what's left of this season.