Rovin Romine said:
I didn't run the recent performances of each, but Peavy's game logs
http://www.baseball-reference.com/players/gl.cgi?id=peavyja01&t=p&year=2014 suggest to me that he's more or less a .500 pitcher - meaning that about half the time the team has a chance to win. He's not exactly an innings eater, but he makes his starts and is probably an upgrade over a #5 starter on most teams.
It depends on how you look at it. His xFIP is 80th of 94 qualified starters. His FIP is 89th and his ERA is 86th. The fact that there are only 94 qualified pitchers means Peavy offers some value in his ability to accumulate innings, but among the guys who also do that, he's one of the worst in the game. I'm not sure the kids you list in #5 are all that likely to be worse and I'm not sure Peavy is an upgrade on what most teams are getting out of the back of their rotations. Here is what the rest of MLB is getting out of that slot right now. This is an imperfect look as it doesn't account for sample size. It's just meant to be a snapshot using MLB.com's depth charts.
Angels - 4.02, 4.05, 4.42 (H. Santiago)
Astros - 4.32, 3.65, 4.45 (B. Oberholzter)
Athletics - 3.14, 3.45, 3,56 (J. Chavez)
Blue Jays - 3.58, 3.24, 3.47 (M. Stroman)
Braves - 3.24, 3.41, 3.26 (A. Wood)
Brewers - 5.06, 3.83, 4.29 (J. Nelson)
Cardinals - 2.84, 3.06, 3.76 (J. Kelly)
Cubs - 2.77, 3.91, 3.59 (only 4 listed, this is for Kyle Hendricks)
Diamondbacks - 5.63, 4.33, 4.02 (6 listed, this is for Cahill)
Dodgers - 2.52, 4.14, 3.64 (J. Beckett)
Giants - 4.24, 3.18, 3.43 (Y. Petite)
Indians - 5.12, 4.48, 3.78 (D. Salazar)
Mariners - 4.35, 5.27, 4.69 (E. Ramirez)
Marlins - 6.03, 3.94, 3.80 (J. Turner)
Mets - 3.01, 3.10, 3.37 (J. deGrom)
Nationals - 2.91, 3.28, 3.81 (T. Roark)
Orioles - 3.91, 5.23, 4.59 (M. Gonzalez)
Padres - 1.31, 3.66, 4.40 (O. Despainge)
Phillies - 4.25, 4.87, 4.72 (R. Hernandez)
Pirates - 3.10, 3.68, 3.78 (V. Worley)
Rangers - 4.73, 5.74, 5.73 (N. Martinez)
Rays - 3.97, 3.39, 3.58 (Only 4 listed, so this is for J. Odorizzi)
Red Sox - 4.72, 4.81, 4.34 (J. Peavy)
Reds - 2.74, 4.36, 3.95 (A. Simon)
Rockies - 7.20, 3.99, 4.23 (Y. Flande)
Royals - 5.80, 3.56, 4.11 (B. Chen)
Tigers - 3.42, 3.92, 3.84 (R. Porcello)
Twins - 4.64, 3.59, 4.34 (Only 4 listed, so this is for Y. Pino)
White Sox - 4.52, 4.75, 4.64 (MLB.com has Thompson listed in the 6th starter role but he's a reliever, so these numbers are for S. Carroll)
Yankees - 4.60, 3.70, 3.75 (C. Whitley)
It seems that most teams are using this roster spot to break in young pitchers which may be skewing the data set a bit, but I'd argue that that's exactly what a team that's not in contention should be doing in the second half. It's also fair to note that MLB.com has Peavy listed as the 3rd starter, not the fifth, but since you are making the claim that Peavy would be an upgrade over most team's 5th starters, I'm examining Peavy in that context. With that in mind, he's arguably worse than every one of these pitchers. At best he's somewhere in the 20-25 range and that's being generous on account of the number of innings he's thrown.
I don't see any reason the Red Sox should be hesitant to trade him at this point. Yes, another 8-2 run might get them within striking distance, but it also could just be the difference between 5th and 4th in the division or 8.5 and 6.5 back with 3 teams left to climb over. And no, 6.5 back on August 1st is not insurmountable, but I don't see Jake Peavy as the difference between overcoming that deficit or not.