In Homer's defense, from 2012-2014, he had a considerably lower FIP than Leake, even if the ERA+ difference wasn't that huge. I guess we can go back and forth on what pitching metrics to use to effectively evaluate a pitcher's true talent, but the one stat that solely judges a pitcher without factoring in team defense favored Homer. In addition, Homer had shown flashes of complete dominance in individual games that Leake simply had not. The kind of dominance that looks like could lead to ace potential and/or have more value come playoff time, so the Reds chose Homer instead to give the extension to.
As of right now, Bailey's injuries are definitely disconcerting and 2016-17 will be very important for him, I agree. Leake's best asset has been his durability. The question is if the Reds can afford to pay for that.