No, once you sign a guy, you are committed to that contract regardless of whether he dies or flies off to Japan.
Let's use the Pujols example. You sign him for 97. You are committed to pay him 97 for that one year. In February, you decide to make it a three year contract for 97-107-117. You are now committed to paying him all three of those years, good ACL or not.
Staying with Pujols. You sign him for 97. In February you decide you just want to leave him at a one year contract. His salary is 97 and when October comes up you decide whether to sign him to a new contract, let's say another one year contract at 112, or another three years at 107-117-127. Either way, you are committed to those new numbers for the whole contract, injury or not. Notice it would have been a lot cheaper to have signed him to the new three years in February than it was in October, but by awaiting till October you got to see him one more season before committing to him long term.
To Vitters. You sign him for 5. In February you leave him at a one year contract. He does terrible, contract is over in October, he's released to free agency. He does great, you sign him to a five year deal in October for 13-21-29-37-45. Notice, if you wanted to gamble, you could have signed him for five years in February for 5-13-21-29-37. Cheaper, but a much bigger gamble.
I know this is complicated, but I think it makes sense. I've been mulling all the possibilities around in my head for a month now and I think this works best.
The problem I am trying to solve is having to sign someone, and then give him a raise before you ever get to see him play. I feel that would take all the value out of prospects which should be the most fun part of this league.