Varejao's probably done for the season, or most of it, plus he's locked-up for a couple more seasons, so I don't see Cleveland trading him without getting Gasol or Bynum, so that's probably out.
Why wouldn't Cleveland do something like that? Get a 1st round pick in exchange for a guy who's going to play 12-15 minutes when their BC is healthy, and get another 1st round pick (and save millions in salary this season even if they have to take Luke back) in exchange for a guy obviously not in their future plans, which enables their younger guys to play.