I messed up and accidently offered a scholarship to a walk on last season.  Yes I know it was stupid and CS would give me no relief. So I had him through his freshman year as a mop up guy. I now want to get rid of him and I have two options.

1. Cutting him now.
2. Playing him very sparingly and watching him get mad and leave at end of soph season.

Here is the kicker. I do not need the roster position this year. My 11 other players return and will be reasonably strong. Plus I have a very significant amount of recruiting cash from a strong ACC

If I choose 1 I have a good sum of money with which to recruit one player
If I choose 2. That money carries over and I am loaded for bear next year.

Both are decent options, BUT my question is which hurt my rep less, cutting the guy or him getting mad and leaving?

I'd cut him.  The reputation ding is fairly slight and the only real affect I've seen is when you're looking for another job.  If you're happy at BC then not being "spotless" will have little or no affect.  Plus, if you keep him there's a very good chance he'll get mad at his lack of playing time but stay anyway. 

If you cut him now, you have a chance to get a recruit you like with your tournament money -- and if you don't,  you've still got an extra scholly next year, and the 15K that comes with it.

cut him now - or use the discouragement drop down - I especially like the options such as

- wash uniforms for entire team

- stencil coach's name on gym floor

- you owe me 150 suicides

- prepare geology essays for starters

- congrats, you are now responsible for replacing light bulbs in the the arena, good opportunity to work on your vertical

I would keep him.  The extra money makes it worth it for sure.

keep him now, cut him next season when you've got other spots opening up and all that carryover money. If he's as bad as he ought to be, just leave him off the depth chart and he won't play at all probably...

Ah!  Failed to note that with that guy, you've got a full roster and so will get all that carryover money.

So, that scholly is worth 15K next season.  And if you have a full roster, then 100% of your conference earnings will carry over to next year --  just on a pure money standpoint, if the amount your conference earned is more than 15K you would be better to cut him next year after the roll over.  

Then again, it all depends on what kind of player you think you could get this year with your tournament money vs. what you could get next year when you'll have at least one other scholarship open. 

Key is, your rep won't take much of a hit no matter when you cut him.

I would just keep a close eye on recruiting.  If there's a player you think you can get this season -- and he'd be as good or better than anyone you could expect to get next year -- then cut him just before signings start and go get that player.  Otherwise, put him on mop-up, hope that he leaves on his own and gets you that 15K, then cut him after the rollover and at least he's earned you all your carryover from this season.

Odds of him leaving when you want him to are low, I have always found when you hope a guy will quit he winds up not quitting.

The rep hit you take from cutting him will only matter if you plan to change jobs in the couple seasons.