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I don't see how this is that bad of a deal for Iwakuma. 
The offer he turned down from the A's was reportedly for four years and $15.25 million.  Which was, on a yearly basis ($3.8 million per) equivilant to what he was making with the Golden Eagles.
He clearly can make more than that this year with his deal with the M's.  
So, in my view, he's trading some salary certainty for an opportunity to prove himself worthy of a bigger payday down the road.  Seems sensible. 
And in no way do any of the comments I've read suggest "one and done" with regards to the M's.  In fact quite the opposite, the reports are that he and his wife fell "in love" with the city of Seattle that it reminded them of their hometown of Sendai, that they checked out schools for their daughter, that the M's "really wanted to get me" and "that was the most important thing".
It's clearly a no-risk, no-brainer move by the M's.  All upside here.  But I see no reason to assume he cannot or will not be extended, rewarded and remain a Mariner if he performs. 
- Ben.