This is actually one of the only two situations where releasing a player makes sense (the other is if you don't want to go to arb with him).
When you release a player with a mutual option in the following season, you are immediately charged the option decline amount for that following season-- NOT the entire amount of the contract. If you need to free up salary at the end of a season to re-sign an impending free agent, this will work to do that, and all you lose is the right to re-sign the player you released during the re-signing period next season.