Sure Dantoni's system helped, but Lin is a much better player than Chris Duhon. Duhon was nothing more than a spot up 3 point shooter in NY, and never scored more than 11 ppg. Lin actually create off the dribble and run the offense well- the Knicks wouldnt have make the playoffs last year without him. Plus he's only 23, he still has time to grow as a player. He may be overrated at 8 mil/ year, but he certainly has more potential than Felton or anyone else the Knicks can get with their lack of cap space and tradeable assets
Lin's better than Duhon, but that's not saying much because Duhon is pretty bad. I'm just saying that D'antoni system is built to make point guards look great. Plus, it's an incredibly small sample size. I'm also pretty sure somebody said that the knicks played crazy good defensively during the winning streak, which makes sense since Stoudemire and Anthony were gone for most of it and they're bad defenders.
The knicks should have just matched the offer because they are going to be paying a ton any anyway, and it's not like saving on Lin allows them to sign another free agent. It's probably worse for the rockets that the knicks didn't sign it. They'll expect him to be a star, and he's probably not that guy.