I definitely agree with the last thing you said. Even if Groce had 5 years remaining, I'd want him gone based on poor performance for 4 years.
If the decision is you want to punt the year, go right ahead and give Groce a 2 year extension with no buyout. Everyone in the fanbase, media, and coaching community will know its a joke.
I'm saying you have to make a legit decision this year, not a punt. If you really want to give Groce another year, you should want to give him multiple years and actually set him up for success with a strong contract so he has job security and is able to recruit. If you don't think Groce is the guy, find a coach that can be that guy.
Also, your idea of a cheap extention is very similar to the Cubit situation. Cubit was basically given a contract that was very easy to get out of, with little buyout, in order to easily fire him and replace him at a later date.
If the decision is not to fire Groce, it would have nothing to do with the desire to keep him for a year just to fire him the year after because we could not find an acceptable replacement this year. If the decision is not to fire Groce, it would mean that UI has decided to give him another chance for at least next year. The whole premise of "we will fire Groce only if we have a replacement already in place" is a dumb argument with no basis. If schools could do that, every school would do that. Especially schools with more resources, money, connections, and larger network.
As far as reaction of fans or others, the reaction would be based on whether Groce is retained on not this year. It is a hypocritical statement to say, I want Groce fired, but if he is not fired I want the University to give him a lucrative contract with large guarantees and buyouts. Are we crazy here? The exact opposite is true, if UI decides not to fire Groce, at least do not give him a lucrative contract with large guarantees and buyouts like we did with Weber and ended up paying handsomely for 3 years past his removal.
I have been around Div. I recruits and AAU for many years, and recruits care about playing for a school and coach, also influenced by whether they perceive a coach is safe or not. But they couldn't care less about the guarantees or buyouts and financial terms schools would have to pay if they fire a coach. That is irrelevant to them. Just because Weber had a large contract, guarantees, buyout made zero difference in his recruiting evident by his empty 2012 class.
As far as Cubit, it is a totally different situation. Cubit was hired as a "stop gap" because we did not have an AD to make a decision and negotiate with candidates. Period. Groce was hired as a legitimate head coach and was supported by the current AD (contrary to Cubit). The decision to not fire him would indicate that UI and AD have decided to give him another chance. Not a decision to keep him with the intention of firing him next year. The same person who will make the decision this year (Whitman) will be the decision maker next year, contrary to the Cubit situation.