I disagree about Michigan needing a "rebuild." They have great personnel on the OL, a terrific group of WRs ... WRs who can block no less, and some good RBs.
Lastly, even if a new Michigan coach doesn't think that Denard is a good enough passing QB ... they can always opt for Forcier, who IS a fine passing QB. Besides, Denard would still be able to develop into a great RB and/or WR for them .... and he could still operate wildcat looks that so many OCs seem to like these days.
As for on D, the new coach will have A LOT of experience at talent to play with in both the secondary and the DL. With all the injured guys coming back for 2011 ... they'll likely have the deepest secondary in the Big 10. Furthermore, Roh will finally have a chance to get utilized correctly under a new regime.
The primary "hole" in the Michigan D will invariably be their LBs. However, even then, Demens is pretty darn good ... it's just that almost everybody else hasn't developed all that well.
Of course, the above is not to say that Michigan will be "all world" under a new coach in 2011. However, I do believe that they'll be capable of being VERY competitive. Heck, if I were a new coach at Michigan ... I'd probably try to poach from Illinois and steal their DC. That, in itself, would likely work some wonders for the Wolverines.