Someone suggested 20% time, your response was to say that it was on hold for a year. Someone else suggested letting him work on something he finds interesting for a while, you say that there are a few things he'd like to do, but they're not 100% aligned with what the company wants to do.
Ultimately, you need to decide just how much this person means to you. Do you want their attention 4 days a week, with 1 day being spent on something they find interesting, or do you want them 0 days a week. Either is valid, but you're going to have to choose.