I don't see the problem of the colts drafting Luck AND keep Manning. Cam Newton only got 4 years 22m. There's a rookie cap now. Keep Manning for 1 year to stabilize the franchise and teach Luck. Then trade Manning to Seattle for 3 1st rounders.
No one even knows if Luck will declare.
BTW, in the 1983 draft, Elway went #1. He was from stanford, just like Luck. The interesting thing is, Dungy (who was one of the steelers coaches) said they passed on Dan Marino, who went to the fish at 27, in favor of the aging Bradshaw. Imagine what would have been for the steelers if they had picked Marino. Also, Bills picked Kelly at 14 and Patriots picked QB Tony Eason at 15. We also had a chance at Marino.
Franchise QBs are hard to come by. If you have a chance to get one, you take it. The Mallett pick is great insurance for the next decade if he blossoms.