JJ can only get an extension for 6 years.
Maggette were in a bad situation with Andre Miller, Odom, Brand all in contract year and he still ended up with his strong numbers. JJ was showing his potential mainly when he was the 1st option in Amare's absence. As someone pointed out, he'd be at best the fourth option this season. If he insisted on bigger contract, let him play out this season, we'd match any offer with no risk then.
It's in the best interest to both the team and JJ, that they agree on a contract to avoid the risk noone wants. A starting salary slightly above the MLE but lower than Q's, but with a lot of addon incentives, would be reasonalbe. Say, 5.3 mil starting in 05/06 with 12.5% annual raise, for 6 years with last two years team's option. If he wins any individual award like allstar selection, all-nba, or all-defensive selections, then he gets a raise of say 10% on the remaining contract and get the last two years secured. If gets another such selction next year, he gets another 10% raise and get a player option for the last year of the contract. (Tim Hardaway got a similar contract back then with the Heats.)
this way, both sides get enough security, but JJ won't feel too strongly "exploited" if he does become a star, realizing the maximum of his 'potential'.