11:35am: Jonathan Feigen of the Houston Chronicle tweets that he doesn't believe last year's rookies (Morris, Parsons) and this year's three draftees (Lamb, White, Jones) are all a part of the Rockets' offer, but that many of them could be involved.
7:43am: In an effort to convince the Magic to deal Dwight Howard directly to Houston, the Rockets are in the process of reconstructing their trade proposal for the star center, according to an ESPN.com report by Marc Stein and Chad Ford. Stein and Ford write that the Rockets are looking to clear the necessary cap space to absorb at least three additional contracts in addition to Howard's, from a group that includes Hedo Turkoglu, Chris Duhon, Glen Davis, and Jason Richardson.
There are plenty of moving parts involved in Houston's planned proposal. The team will sign Jeremy Lin and Omer Asik to offer sheets soon, and while Lin's will certainly be matched by the Knicks, it's less certain that the Bulls will match on Asik. If Chicago does bring Asik back, and Houston parts ways with Luis Scola, perhaps by amnestying him, the Rockets are confident they can fit many of Orlando's bad contracts under their cap.
The Rockets' offer to the Magic would involve some or all of the following assets heading to Orlando: Kevin Martin, Patrick Patterson, Marcus Morris, Chandler Parsons, Jeremy Lamb, Royce White, Terrence Jones, and future draft picks. The Rockets would also likely have to let go of a few players on non-guaranteed deals in order to absorb all the incoming salary.
Stein and Ford caution that the Magic are expecting a quiet weekend on the Howard front, which is probably fine for the Rockets, since the club needs to resolve the Lin and Asik situations before seriously resuming its pursuit of D12. When the Rockets are prepared to put their offer on the table, it might be the one that appeals most to the Magic. According to the ESPN report, GM Rob Hennigan is more interested in a package of young players and picks than he is in taking on a player like the Lakers' Andrew Bynum — like Howard, Bynum is entering the final year of his contract, so with no assurances that he'll sign long-term, the Magic could find themselves in a situation similar to the one they're in with Howard, albeit without the history.
ESPN.com's Ric Bucher adds that the Hawks continue to pursue Howard, but hears from a source that Atlanta is "not the best option" for the Magic.