I think maybe the draft ought to be cut down a bit if teams don't feel it is a big deal to "waste" a pick.
The first part of the draft is where the teams feel their prospects are. The middle part, they begin filling out their rookie ball and short season rosters. Seems after those spots are filled, perhaps after the first 30 rounds or so, maybe the draft ought to end. bbscout used to joke (I think) that most players were drafted so the prospects would have somebody to play against. The more I am around the sport, the more I think he was not kidding.
There is uncertainty however. A team may not be able to sign its picks and then left short for the summer rosters. Seems free agency ought to be able to handle that problem nicely with some kids probably making a buck or two more than if they would have been drafted late.
Someone mentioned something about assumptions above - I never assume. Just because someone was drafted, does not mean that they can play or otherwise advance. I follow countless numbers of Mendoza line hitters in the minors every year. Similarly, some pitchers never figure out how to throw strikes and when they do, they get hit hard. They look good in their uniforms however.
Contrary to all that, I do not assume that kids who are not drafted cannot play. One could argue that 30 teams passed on them 50 times but there is group-think out there that is far from perfect. I would encourage a kid to pursue a free-agent opportunity if they believe they can play. That is the most important part of the whole equation - it starts with a belief. Lots of people tell us lots of guys can play but after the contracts are signed, it's produce or go home. Some guys refuse to be told no and refuse to give up their beliefs in themselves. It takes talent no doubt but it takes an iron will to develop it and more importantly deal with the failure that inevitably comes along with it.