From what I remember, talks between UT and Cutcliffe got pretty serious after Kiffin left in 2010. I heard the hanging point was the staff - Cut wanted to bring pretty much his entire Duke staff with him, and the UT admin was adamant about keeping several of Kiffin's assistants. This holds water because Dooley kept at least one Kiffin hire (Chaney) and it seems like there might have been a few more.
I don't doubt that Cutcliffe would do well initially at UT. He's a keen offensive mind and his preferred system would translate very well to their current personnel. I'd be a bit concerned about who was running the defense if I were a UT fan, but Cutcliffe's teams have always been very well-coached and very efficient on offense. Probably the biggest issue with Cutcliffe is that he would be perceived as a "bridge" hire: he's 58 years old and has had some health issues, and his penchant has never been defense or recruiting. He'd be a guy that could come in and right the ship in a reasonably short period of time, but long-term it seems unlikely that he'll out-recruit guys like Richt, Saban, Muschamp, etc. Plus his age and health issues.
From what I hear, those bridges were likely burned in 2010 anyway, so I'd look elsewhere for UT's next hire.