This is the bit where it still makes no sense, 'cause McLeish was neither the cheapest nor the safest reasonable option. If it was pure cost-cutting and just trying to find a manager to tide us over until a sale, then there were free agents like McClaren and Curbishley who would have surely made more sense. Would have needed no compensation and they would have jumped at the job, whatever wages or long-term prospects were.
Even though it defies belief, I think the most logical reasoning is that Lerner/Faulkner genuinely thought they were making a good choice with McLeish and intended it to be long-term. It doesn't make financial sense otherwise.
You're right that it doesn't make sense that McLeish was appointed. He's terrible. I think that they thought we would get him for free if he resigned from Birmingham first but it backfired. I thought all the compensation to them was for their backroom staff the McLeish wanted anyway?
They probably didn't go for Curbishley cause he's been out of the game for a while (like Houllier and they didn't want all that again).
They didn't go for McLaren cause the fans didn't want him. This of course contradicts the appointment of our current manager but by that point I think that they were honestly sick of looking for someone and that no one else was available PLUS Randy thought 'I'm going in a year anyway'. AND they didn't want a pre-season without a manager two years in a row. So they panicked.
Trying to make sense of illogical decision making is really difficult I grant you but at some point during our opinions we have to put somethings down to the fact that the board are incompetent at some level.