Rincon was a very valuable reliever for the Twins from 2003 to 2006, but he simply hasn't been the same pitcher since. In 2007, he had a 5.13 ERA, and this season his ERA is sitting at 6.11. You can excuse a few months of a bad performance, but nearly a year and a half is a trend that's unlikely to be reversed. For whatever reason (blame performance enhancers if you want, although I don't necessarily think that that's the only reason), Rincon has flamed out.
Ultimately, the Twins needed to make a decision based not on what Rincon used to be, but on what he is now. They made the right decision. For his sake, I hope he can regain his form and catch on with another team. He should have a shot -- as the Strib has reported, the Twins are on the hook for the remainder of Rincon's season salary, while any team that signs him will just have to pay a pro-rated portion of the big league minimum. That makes it very likely that someone will take a chance on him, because there wouldn't be a lot to lose.
For the Twins (and fans like me, who were apoplectic about having a 13 man pitching staff), it's time to move on. All I can say is, I think this came about 2 weeks too late. Credit goes to Howard Sinker, by the way, for calling for this long before anyone else was. He was on the money.