This may be crazy, but if AEW signs all the guys cut, that will kill AEW's image, as they will no doubt end up doing the same thing WWE is doing, which is "misusing" talent by sheer virtue of having too many wrestlers and not enough TV time.
Supposedly WWE is telling people it's budget cuts (same shit they give for all the releases). Honestly wouldn't be surprised if WWE is saying this to protect him if he personally requested his release to deal with those things. But also I'm willing to bet that if he was dealing with serious issues WWE would be helping him deal with them, not cutting him loose (or they release him and help him at the same time). If they're helping him, I'd be willing to bet if he'd get back to wrestling it'd be with WWE again.
As to my thoughts on his release. It sucks as he was a great character and the Firefly Funhouse was amazing. However, as great as The Fiend was he was WAY too OP and nearly impossible to book well. In his first big contest he no-sold about 900 chair shots and curb stomps which lead to a rather stupid finish in a Cell math. When he was booked to lose it was terribly received (likely because of who beat him but still it took a ton of finishes to even make it remotely believable).
WWE is having a similar issue with Alexa right now which is why she rarely loses, and when she does it's in multi-person matches where she doesn't have to eat a fall. In the Money in The Bank match they had all 7 competitors bury her in ladders to get her out of the match.