I think the real problem was not only losing Madson, but losing Masset and Bray as well. Masset was likely our 8th inning guy going into the season and Bray was our lefty specialist. Chapman fills both those roles. Take into account also that the trades of Boxberger( in the Latos deal) and Travis Wood, who could have potentially been a reliever, left us woefully devoid of any talent at AAA to bring up. We had to trade for Hoover and pick up Simon on the waiver wire just to fill out the rest of the pen. Moving Chapman to the pen was the reasonable thing to do.
Everybody, except maybe Dusty, realizes Chapman is much more valuable out of the rotation, but at this point in the season moving Chapman to the rotation seems unlikely and probably not in the best interest of the team. Chapman would need to be stretched out, which likely means he would need considerable time and innings in AAA. With the way our pitching has been unable to go deep into games(Latos, Leake and Bailey come to mind), losing Chapman would be a pretty big blow, as he can go multiple innings. Plus, there is no guarantee that Chapman, himself, would be able to go deep into games if he were in the rotation.