If Nate turns into a 4 WAR guy, it would certainly be nice to have him signed up to a inexpensive 2-3 year deal.
On the other hand, even with a big year, he's not a guy that's signing a really long term deal or for really significant dollars. At most something like 3/$30M. Signing him to a 2/$14M deal right now would get some extra value than needing to give him more money at the end of the year, but it's not the potential windfall that an extension for someone like Manny could end up being.
Still being a benefit is the key.
Since McLouth had the 3 previous years of injuries and non-production, the baseball world didn't buy into him when he hit the market this past winter. If he continues to produce, I agree with what you, and SG, and VM said above as realistic contract wise.
I think there is a decent % chance that McLouth would want to play the rest of this year out, and see if he could fully cash in on the highest end parameters outlined above.
I also think there is a decent % chance, that McLouth would look at an extension offer today fairly favorably. He would know there is a risk of injury or non-performance going forward the rest of the year. Turning down a raise, and guaranteed dollars would be a risk.
Getting back to SG's post above, you could argue that offering him any deal right now is a risk. A 2 yr $14M offer from the O's would obviously represent some risk. It's reasonable enough though, that even if he again becomes a guy you would prefer only as a 4th OF, that you could live with the deal.
As you mentioned you could also get some excess value out of the deal, and you would also know you have another option for LF (and leadoff) under team control. That also has value.
I would hate to see McLouth finish very strong this year, hit the open market, and the O's feeling obligated to go to the higher ends of what the market will allow.