Is it possible that they rule it a catch but since his knee was on the ground he was down by contact, thus REALLY screwing the Broncos?
No it's not, if anything it's a catch and down by contact, his knee is down. It will be incomplete as he did not maintain control through out the catch.
It looks like he never really had it, but if this was somehow overturned, his knee clearly hit the ground, so I actually think he would be down by contact with a first down. But, again, it's going to be upheld as incomplete.
It's worth it. If by some miracle they win the challenge (even if it's super-low probability), game over. If they don't win it, it's not like they were really going to need it anyway. And the D gets to rest.