Actually he did. The deal was agreed upon prior to the hearing, and then upheld by the arbitrator.
Since Hudler was the one that filed for arbitration, the stipulation was that if he returned to the NHL, he would have to honor that contract.
When he returned after the one season, he fulfilled that contract ($2.75M in year one, and $3M in year two).
I always thought Holland was trying to "play it cool" like he did when he had his hands somewhat tied by the cap coming out of 05-06 when he similarly lost a 40 goal scorer, as well as Steve Yzerman. They ended up elevating Kopecky, Hudler and Filppula and the later two quickly became core guys. The also had Cleary and Franzen take huge steps in the next couple seasons.
In the same way, the Red Wings came out of 08-09 with Ville Leino under contract for a measley $800k coming off a stint with 9pts in 13 games, Ericsson playing well as #5D after Lilja goes down, Helm getting ready to play his first full season after being a regular for the two Cup runs, and Justin Abdelkader scoring a couple of goals in the finals against the Pens. I think Holland expected similar results to what he got between 06 and 08, but none of those guys panned out like Filppula and Hudler had, with Leino bombing especially horrible.