I think that its certain that Washburn pitched better than he ever had as a Mariner this year.  I've had a couple of debates where the counter-argument has everything to do with strand rates, pitch/fx data and neo-analytical catch phrasing.  Much ado about statisical regression and so on.  What they miss is exactly what you seem to be pointing to, Doc.  Averages are based upon highs and lows in a spectrum, there is no physical law enforcing one to fall back towards their mean totals.  Many scoff at slight adjustments that a guy makes in his delivery, and the truth is, they often don't work.  But sometimes they do, and instantly you have a new ballplayer.  Jarrod appeared this year, to add a wrinkle,(slow curve), turn over his fb a bit, and pitch lower in the zone.  We can go round and round about LD%, it means nothing when those line drives are singles instead of doubles.  The flyball % means nothing if they are by and large of the lazy variety caused by a fooled hitter.  Many examples, impossible to convince the Sabes that they don't have the answers.  
 
Whether he pitched better this year because of job security, contracts, whatever, he just pitched better.  There are enough examples, across the sporting world, that one at least has to ponder the significance of "contract year" ballplayers.  

Matt, one can't disprove a negative statement.  I didn't see anyone claim with any certainty that Washburn only pitched better this season because his term was up.  But you really can't make a contrary statement, because frankly, you don't know what he's thinking.  He's a guy that had a very good year.  And just like I ( and I believe that I was alone last summer) saw no reason to give him away a season ago based on Saber declarations of 100% disaster, I also see no reason not to move him this year and would not re-sign him in the off-season at any event.  

Research doesn't show that contract years don't exist, it shows that the best explanation of a spike in the last year of a contract isn't that the person is in the last year of his contract.  This is a claim about what we are warranted in inferring.  Of course, you are right, it's always possible that in Washburn's case the REAL explanation is that he's trying to make a buck.  We might find independent evidence that corroborates this hypothesis, but, on the basis of the evidence we have (you may have more), we aren't entitled to infer it, and hence we shouldn't do so.
Second, as regards projection, you are running together two different things.  1) what a person will do and 2) what I'm entitled to project on the basis of past events.  Nobody is denying outliers, nor are they denying that there is some explanation for why those individuals are outliers.  What people are denying is that we can antecedently predict who will be an outlier (precisely because we don't have adequate evidence about what the explanation is for why the outlier is an outlier). If we only classify players by standardly available statistical pitching categories, then there appears to be no evidence of contract years.  So, for you to form a meaningful projection, you need to first have different categories for typing players so that you at least get statistical reliability linked to those categories that can be predictive of "career years", and then you need to posit a plausble causal explanation for why we get the results we do given those categories.
As regards actual decision in games, I have never heard a SABR person say that you should never bunt/steal/whatever under some very abstractly characterized set of circumstances.  All that I have read are willing to admit that there can be defeaters to these generalizations like when the pitcher has a really slow motion, the third baseman sucks and the runner on first is fast as hell.  What I have seen people criticise is managers who make decisions to bunt in certain circumstances when the obvious potential defeaters to the broad generalization that you should not bunt in those circumstances aren't in play.  I don't think any SABR person would have qualms with a manager who explained that Ichiro is different from the MLB average player and hence the generalization didn't apply.

Avoiding all debates on contract years - MY personal feeling in regards to Wash's 2009 performance compared to his previous 3 seasons with the Ms comes down to two factors that changed DRASTICALLY in 2009.
1) No longer pitching to Johjima.  It was no secret that these two had friction.  This didn't mean EVERY outing with Joh was a disaster -- just that the sum of the outings were slightly below Washburn's previous results.
2) The entire defense made a quantum leap forward.  The TEAM DER, (which includes everyone pitching other than Wash), was poor, bad, and garbage in the previous three seasons.  In 2009, it's #1 in the AL.
Doc notes Wash was miserable after '08.  How does ANYBODY do their job when they are miserable?  Unless your job is to be the snooty maitre'd at a French Restaurant, whose job description is to maintain the stereotype of the French as stuck up, arrogant snobs -- then being miserable likely makes you worse at your job -- whatever it is.  (This is especially important to understand considering the Ian Snell acquisition). 
But, as Doc notes -- there can be outliers in any circumstance.

from simply saying that empirical evidence can provide information abou what you ought to believe, and about what methods you should use for further refining you beliefs, but it always falls short of ensuring the truth?  I can't see any person seriously claiming that it would be impossible for them to be wrong about an empirical belief, and hence I'm led to think that your assertion that there are many people in the SABR world who are guilty of the logical fallacy you are ascribing to them is uncharitable on your part.
 
Guess all you like, but on the basis of the evidence we have, there is still no good reason to believe in the "career year" explanation.

If we were warranted in using the "career year" explanation, then either 1) there had better be a pattern of improvement in the final years of a contract (which there isn't) or 2) we'd have to have some other evidence to the effect that this case was the exceptional career year (which as far as I know, we don't have).  This can all be true and it still be the case that Wash IS having a career year.
Further, I'm not using any abstract "there is no evidence that X is true so we shouldn't believe X paradigm" (that we can save for another discussion, but for the record I don't actually endorse it since there can be a large number of cases where it's better for a person to have false beliefs).  I'm pointing directly to what would count as evidence of some player having a career year (note that 2 could include a huge number of plausible explanations whether they are countenenced by sabermetricians or not including and not limited to a dinner conversation with Wash where he admitted that he decided to turn things on this year so that he could make a buck) and then pointing out that we haven't satisfied either of these constraints.  This all has nothing to do with some view about the legitimacy of elites.  I couldn't care less about elites. It has to do with an understanding of what it is to be epistemically justified in holding an empirical belief.
 
As for the rest of the post:  Yes, there are lots of arrogant people in the world, but don't confuse arrogance with a commitment to infallability.  If your Sabermetric friend is endorsing the claim that "we have no reason to believe P therefore P is false" they are comitting a fallacy.  I prefer to interpret them as saying "you aren't warranted in insisting that the explanation for Washburn's success is that he's in a career year, so stop acting like you are". Of course, I wasn't at the dinner table.  If they did the former, then shame on them.