Peja-Artest swap won't happen for the following reasons:
1. Someone compared Peja to Reggie Miller. PLEASE. That is like comparing Brad to Shaq. He is good, just not that good. Pacers already have tons of outside shooters like that new European guy(whose name is just so difficult to spell...), Stephen Jackson, Fred Jones, etc, etc. Peja might be a good fit in Pacers, but they don't really need him that much.
2. Despite some rumors, Bird IS happy with the current roster. The only problem Pacers currently face is that they have TOO MANY talents. Lucky bastards! The team is so deep that their second lineup can play against almost any starting lineup in this league, at least defensively(wonders like Shaq, AI, Kobe, or LeBron excluded, of course). Their deepest positions are SF and SG, either of which would be Peja's slot if he were traded. If they were going to trade one of their best player, they will want to strengthen some other positions, perhaps a center or PF. Getting just Peja for Artest doesn't give them any more edge than what they have now. Bird is too smart for that.
3. Artest is REALLY happy with Pacers. He likes Indiana, and would prefer to stay if he can. But if he were to be traded, I heard that he'd prefer any East Coast cities, and maybe, a big maybe, Dallas. Sacramento would be the least of his choice. An unhappy Artest is practically useless. He is motivated, but he has caused a lot of problems in Indiana where he IS happy. I don't even want to think about how he'd behave if he ISN'T happy with the team. In short, if Artest came, it won't be a long stay. However doubtfully able the Kings' front office is, they won't pull it off unless they are sure they could make Artest a happy King.
If there were to be any trade involving Peja and Artest, it won't be a swap, but:
Case 1. Multi-players trade between the two team
Pacers were a little embarrassed to find out how able Brad was after they traded him. They have a few reliable centers in Jeff Foster and Scott Pollard, but neither of them is capable of what Brad can do. Pacers would love to have Miller back in their lineup, even if it meant giving up a little more than Artest in return of Peja AND Brad.
Pacers are also happy with their point guard Tinsley, but the guy has been injury-prone last few years. If the Kings are willing to overlook his injuries, Pacers could consider adding Tinsley in the trade for Peja and Bibby. Doubtful scenario, however, since the Kings are very happy with Bibby despite his shortcomings lately.
The last possibility is Reef. Unlike the Kings, Pacers' system really could use Reef well. If someone other than Jermaine can post down low, it would make things much easier for their guards. Reef wouldn't mind Pacers either, since things look MUCH better with Pacers than Kings... Only limitation in this scenario is that Pacers couldn't really offer the Kings that can fill the absense of Reef. Pacers see Granger as their future prospect, so he is out. Fred Jones, Anthony Johnson, or any other guards on the roster play roles too vital in their system to give up. Perhaps Pacers would offer Croshere or Foster, neither of which can really fill Reef's gap. Then again, the Kings' front office could pull another sucker trade like C-Webb trade last year... but I'm sure they learned their lesson.
Case 2. Peja-Artest trade with some addition
The Kings might offer Pacers some draft picks, or cash. Well, the money is out, since their assets are currently tied up with the new arena deal. Draft picks are more likely to be offered, but not likely to be accepted. Pacers have done wonders with the little picks they have had, but they already have a team built for a race to championship right now. They don't really have to start saving for the future. If they are to give up their young star, they are not going to do it in exchange of any future possibility. They will want something they can use right now, in addition to Peja.
Case 3. Trade involving several teams
This is the most likely scenario. Chicago and many other teams are interested in Peja, and any team in the league would love to have Artest on their team(well, maybe not Detroit... especially not after what he pulled last year.). Pacers could send Artest to some other team, most likely an Eastern team, whom then would send someone to the Kings, so that Peja can end up being a Pacer. Any other way wouldn't happen since Pacers have not shown any interest in any other player than Peja, and Pacers front office always stick with their plan. They rarely pull a surprise out of the hat, so any trade involving Peja would send Peja to Indiana. With Artest clearly showing disinterst to being sent to West, the chance of him being a King is, sadly, very slim. The most likely scenario, but still unlikely to benefit the Kings much anyway.
In short, whatever happens, Peja trade with Pacers is not really likely to improve the Kings' current situation...