OK, so I know I'm late on this, but I think understanding this trade requires two different perspectives: examining what actually happened and then considering what alternative routes might have been taken.
What went down
Here is the sequence of logic that lead to Joe Colborne being traded, as best as I can surmise:
1. The Leafs are tight up against the cap and can only fit one extra forward into their lineup. They could technically go up to a roster of 23, but that's not going to happen.
2. David Clarkson gets himself suspended, Fraser McLaren has his pinky finger broken, and the Leafs look to keep a winger.
3. Carter Ashton is the only Leafs winger left in camp who is no longer waiver exempt. The Leafs don't want to lose him for nothing. He stays.
4. Joe Colborne simply isn't better than Jay McClement, and so doesn't deserve the 4C job.
5. Trevor Smith is far less likely to be plucked from waivers than is Colborne (due to the players' respective ages) and so, because the Leafs can't carry two extra forwards, Colborne gets the axe.
It may have appeared that this trade was due to job competition, but it wasn't really, outside of Colborne outperforming Jay McClement. It was really about waiver exemption and a tight cap situation.
The Leafs could have jettisoned a pugilist or two to make room for Colborne, but all know that was never going to happen. Moreover, they both play wing, and Colborne would have had to adapt, which is unlikely to have done great things for his game. I think we'd all love to see a marginally skilled fourth line on the ice, but we should probably set aside hopes of that happening anytime soon.
Really, to fix this cap situation, the Dave Nonis would have to find a continuum transfunctioner, jump in a time machine and go back to July 1st, but that's playing a pretty wild game of revisionist history. Not to mention too rad to be real.
If Colborne were kept as a 13th forward (that is, only one goon was traded/waived to make room), he'd wind up sitting out a lot. Not exactly a great way to develop talent. Plus, maybe when he does get in, he still has to play wing.
It's true that McClement could be shifted to play wing, but since centre is a more important position than wing, it makes to keep the best guy for the job there.
Colborne still gets traded, but brings in a better return. This wasn't going to happen, since every GM in the league knows where Nonis stands in terms of the cap, but more importantly, they know that Nonis only has a few days to move Colborne before they can potentially have him for free. Nonis has next to no bargaining leverage here.
I'm sure there are other possibilities here, but screw it.
It seems like the Leafs made a lot of good, short-term personnel decisions, but ultimately lose out on another young player (with admittedly limited potential) because they short-term-decisioned their way into a corner where they didn't have much choice but to trade Joey C.
Hope he does well in Calgary.