Michigan has offered 3 kids in-state so far Boubacar Cissoko, Dann O'Neill, and Fred Smith. They are looking at Charles Burrell (Smith's teammate) and some of the Muskegon kids as well. Gray doesn't have an offer yet and I wouldn't expect him to get one for awhile.
I think they are going to go after bigger fish in the 2008 class before offering Gray, and there is a RB in-state in the class of 2009 who might be the best HS back in-state since Grady. His name is Hersey Jackson from Allendale High. He's listed at 6'2, 205, definetly looks the part. He's also an accomplished track athlete with a personal best of 10.9 in the 100m. You might be thinking 10.9, that's not exactly blazing- but again he's 6'2 200+ pounds and he's only a sophomore.
I think Hersey Jackson is going to be one for OSU fans to look out for in the future as well as Dion Sims (6-5, 230) of Orchard Lake St. Mary's because both of them are going to be among the most highly recruited football prospects the state has ever seen. Jackson and Sims will have national offers pouring in just like Johnson and Allen. They're going to get offers from just about everybody, in Sims case it'll depend on what sport he wants to play, basketball or football, because I've seen him listed among the Top50 prospects in his class for basketball.