Ok, here is my math so far:

Okaro White and Rodney McGruder are partially guaranteed. We don't have to do anything with them. We can commit their salaries later without impacting our current situation (we'll already be over cap.)
We also have a ROOM-MLE exception once we are over cap and minimum contracts as well. Right now we only have two slots though. Also we'll have 3 two-way contracts for Sioux Falls development. Again no impact, as far as I can tell.
So, we don't have enough for Ellington if the contracts are conventional. I think there is more going on, though. We might find that James Johnson, Olynyk, and Waiters have different incentives priced later into their deals. The Heat then opt into Wayne Ellington's deal.
Otherwise, we will find that they do not (which is most likely.) In that case, we will give up our Team Option to Ellington and he will be a free agent, able to sign with anyone. We can offer our ROOM-MLE and see if we are outbid. I suspect we will be outbid. Let's see what happens.
Incidentally, waiving Babbitt doesn't help. Luke's contract would be replaced with an unused player slot, which is only a little less. I predict we resign Babbitt over the cap.