Hill was last year's best receiver. 31M against the cap is not such a high number. And he's not playing in 2026 with his current deal. Also, Hill's deal (4Y/120M) is higher than Waddle's, having also a higher fully guaranteed amount.
You keep your great players, if those happen to be 2 WR you still do it. Dolphins cap/roster problems arise from the draft capital invested in trades and the fact that you are obliged to extend the players you trade for (Hill/Ramsey/Chubb, and therefore the cost is draft capital+contract), as well as the bad FA huge contracts they've given (Byron Jones/Ogbah) and not hitting many premium picks.