I can understand why Toronto would walk away if Blake was insisting they take back another contract with term, even if the cap hit is less. That kind of deal makes no sense from Toronto's perspective, and if Blake was insisting on this, then he blew it. The only players under contract with the Kings who fit that description are:
Kovalchuk
Brown
Carter
Phaneuf
Martinez
Quick
I doubt Toronto wants anything to do with Kovalchuk, Carter, Phaneuf, or Quick at this time, so if it was one of those Blake wanted to include in the deal, he needs to wise up.
I could see a trade here where Blake is hoping to expand the deal and move Martinez for younger assets coming back from Toronto. I could even see Brown be traded if Toronto is one of the seven teams on his list. Maybe those two aren't players that interest Toronto. If this is the case, then it was worth a try on Blake's part. In any event it would seem if Toronto wants to move Marleau, then they are going to have to dance to his music and possibly Blake's as well. Time is on Blake's side here, let's see how this plays out.