I think Daniels showed enough during the season that they don't really need Fair as badly as they initially thought. The younger Daniels as a redshirt sophomore will probably be better than Fair who would come in as a junior. As others have said, it would be better to bring in a big HS nose tackle who could redshirt next year behind Daniels and the seniors. Unless you are desperate for depth, there's no need to bring in any juco who you do not think can start for you.
I agree with basically everything you typed. They cut him loose to free up a scholarship because they are comfortable at NT or/and they are in on a more talented player.