Smith's "consultant" called in to local radio this morning and gave his version of what's happening. To hear him tell it, the riff is basically a clash of egos. Smith runs workouts in the style of "x", whereas Kiffin wants them run in the style of "y", which is basically the way they ran them at southern cal. Kiffin is the boss, Smith is his employee, Smith doesn't want to do it Kiffin's way, so it looks like Smith will be out the door.
There is also some speculation that Smith wants full control of the gym, i.e. no former players, etc. Kiffin supposedly is trying to welcome the former players who seem to want to hang on and be a part of the program.