Completely disagree. Whilst the media beat up about this shit is always ridiculous, they wouldn't be quoting that number for no reason. It wouldn't surprise me at all if that's what he and his manager are after, but again I remain sceptical.
Don't get me wrong, Dugan is worth 700k a season, I would LOVE to retain him and you are right, his knowledge will be invaluable to our juniors, so let's just make that clear before I continue.
However on what you were saying about it "balancing out" with playing Dufty at fullback, you are completely wrong. Whilst Dugan is a current rep player and has been phenomenal for us, if he is demanding this sort of money for 5 years it drains too much of the cap on one player for too long. You are saying "pay him what he wants", well I guarantee you he wants a long-term contract on huge money, anyone would, especially a player of his calibre. If Dufty, Field, Herbert, Garrick, Robson, Thompson or any of these guys breaks through.. When it comes time to re-signing them we will lose the battle to other clubs purely because we cannot afford to retain them due to the sort of money Dugan/Hunt will be on. Long term contracts are too risky for players like Dugan, especially if it's a ridiculous amount of money. It throws the team cap out of balance, you basically have to plan the qhole squad around one or two players.
Dugan's future lies in the centres, there is no doubt about that, either he takes a pay-cut.. Stays on his current salary or he leaves. The extra money will be necessary for looking at players to bolster the pack or keeping the cap balanced for the future.