There is an arrest warrant against Assange and the British Government has a duty to carry it out. If they do not carry it out then theoretically anyone on the run could seek asylum in a foreign embassy knowing that if successful it was just a matter of time before they could make their escape.
I also wonder what would happen when the UK wanted to extradite a person from a foreign country after letting Assange walk. Would their position be weakened?
It is a bad situation but it seems like Assange would rather wither and rot stuck in an embassy rather than deal with the charges against him. The reason he will not come out is because he is locked in a prison of his own paranoia.
It is certainly money wasted but it seems that due to the chain of events it is money which has to be wasted.