It could be some of both. Plus the fact is, the switch had to be made sooner or later, and Favre's "retirement speech" sped everything up in my view. I think that was the point where MM and Ted Thompson said "Ok, AR is the guy now, we have to prepare knowing he will be our starting QB."
At that point, AR was told he was the guy, and it would have been hard (not impossible, but very hard) to change it back again.
They WERE prepared to do so when Favre said he wanted back, then backed out again.
That put the "nail in the coffin" in my view.
Denver not wanting Cutler shocked the heck out of me. He's been looking pretty darn good, and to even LOOK for a different starting QB HAD to feel like a slap in the face. Cutler is just into his prime, and to push him out seems pretty stupid to me.
The Denver fans must be having fits right now.