A slight pedantic response, it pays for 2 rookie contracts but it wouldn't really allow you buy the contracts of 2 rookies. Baseball rules are designed to suppress the salary of rookies below their free market rates in order to benefit both veteran players and less wealthy teams. The end result is that any decent rookie has a lot of surplus value attached to their contract and they become an asset rather than a liability. Teams generally need to give up multiple millions in value in order to "buy" a rookie from another team and gain the right to pay that player half a million dollars.
If I'm "Joe Small Market Team" and I'm running my team with a self imposed cap of X, having 1.2 million dollars off my payroll means I have the ability to call up rookies I might not have been able to if I did have that 1.2 million on my books.
Are there infinitely more factors in play (namely playing time BS in order to maintain team control prior to free agency) in these types of decisions? Of course. Do I believe that this hypothetical scenario would ever come up: No.
But, 1.2 million dollars = 2 Rookie Contracts with beer money left over. Them's facts.
I generally agree, which is why I made the distinction between "pay" and "buy". Although you also have to factor in that rosters have a limited size. If you are calling up a player, you need to get rid of a player. Veterans have guaranteed contracts, so adding a young player to replace a veteran will increase payroll like you suggested. However a young player's salary doesn't have the same guarantee if they are removed from the roster. Therefore shuffling out one young player for another generally has little to no impact on the overall payroll.
Let's say I'm a terrible baseball owner, and I'm completely out of available cash because I'm still paying a 1.2 million dollar contract. I literally cannot get a single extra dollar from anywhere.
Having that contract on my books prevents me from calling up 2 rookies this season, because I'm unable to pay their salaries. Yes, I'm technically buying them from "myself" by pulling them from my team's MiLB affiliates, but we're just arguing the semantics of what "buying" means here, not what the going rate of a rookie is ($555,555 USD in 2019)