If possible I would prefer Benzema to return to Europe and I think there he would still be more comfortable than in the Saudi league. But there is one thing that will create bad sentiment towards the Saudi League if that happens and perhaps in the future the Saudi League will not be a suitable home for footballers from Europe. Such a summary could be made by the media and the Saudi league would again suffer losses.
Maybe even if Benzema's performance is not so promising even though he has trained again, what is important in my opinion is that Al-Ittihad can keep him until his contract ends. Because I'm pretty sure there are other profitable agreements despite his declining performance and that could at least be a replacement for his failure with Al-Ittihad.
But to which team? I mean Benzema is old, and hasn't really shown any greatness in the last 2 seasons, just because he won Ballon D'or a year before that, doesn't mean that he is still great. Last year at Real he wasn't great and so far he hasn't been playing much this season neither, all of which means that he is not that great.
I believe that European teams would want him only if they are a small club, maybe some smaller French team may want him, not just for his talent, which he might be good for a team that level but also for jersey sales. How many mid table team could get a player after they won Ballon D'or, that should be the most important part. All in all I think it will be quite good for them to hire a player like that, but if only he is cheap.
Al Ittihad are unlikely to get what they want from Benzema, even if they keep the former Real Madrid man until the end of his contract. I agree, it doesn't look like Benzema will return to Europe, the main obstacle is his large salary. Clubs in the European League are certainly more willing to invest in younger players, although Benzema has proven abilities. In the January transfer window, Benzema was linked with Manchester United, Chelsea and Lyon, but this never happened.