What do you think about that strategy to free up a roster spot that is taken by a player not maximizing his potential and showing a low work ethic? Would this poison team morale or impact recruiting ability? All my scholarships for the coming year are taken, but I still have some nice recruits who are very interested that I would rather have than some underachieving guys. It's February in the season, but with if I get read of the bad performers and recruit one of these kids?

Sure, cutting the guy might be a good idea...your team's prestige is likely to take a small hit (probably 1 or 2 points), but you can then go after someone in the spring to fill the available scholarship. Make sure you have enough remaining recruiting budget.

It always costs either zero, 1, or 2 points. Never more than 2, to cut a scholarship player. It's sometimes well worth it.