The Bills tried to negotiate with Peters last off-season, but he refused to even talk to them. This past off-season he demanded to be the highest-paid LT in the game after a subpar season. I have no problem with how the they handled him, after giving him a large extension after just 2 years of developing him, only to see him act like a dick after his first Pro Bowl season, and continue to act like a dick after a subpar season. I also wasn't keen on the Bills throwing a ton of money at him, only to find out last year wasn't a fluke and that he'll continue to miss at least 2 games a year due to injury and/or has had his talent robbed by injury. After seeing him lie and make excuses at his Philly PC, I was glad he and his pathetic attitude are gone. Besides, committing almost 10% of the salary cap to a LT is crazy, especially since you don't need a great LT to be successful.
As for Dockery, they tried trading him, and all they got was a last-second 2010 7th round offer. What more did you fantasize they'd get? And just because they didn't have a plan (which isn't true since they were looking at OG's, who are still available, and still had the draft) for his replacement is no reason not to cut him.
The Bills obviously like Wood and Levitre enough that they're willing to starter them despite being able to make minimal changes by having Wood or Levitre start at LG and putting Chambers or Bell at LT. And you see, those options still exist.