Wasn't the probation writing on the wall, when Holtz was pushed out? Or did all the violations occur solely under Davies?
Kelly made a stupid comment at CMU about some players who refused to come forward in a murder investigation being products of their environment and raised in a culture that stigmatizes cooperating with the police. It was a poor choice of words but probably a fairly accurate summation of the issue.
Everything that I've heard of Kelly is that he runs a clean program. His players go to class, graduate and don't get arrested. If he can accomplish that at UC (an urban commuter college with a history of renegade athletic programs, rogue coaches and what clearly seems to be a win at all costs fanbase), I have to imagine that he'd do very well off the field at either ND or Michigan.
I think the biggest issue with Kelly at ND is that he is a pro-choice, liberal Democrat. Given the fact that ND has chosen to toe the current Vatican line fairly closely (as opposed to what the better Catholic colleges like Georgetown and BC have done), there might be some quiet internal opposition among the priests to his becoming the face of Notre Dame.