Things do look very clear through those hingsight goggles... but I would be careful about making such a definitive pronouncement. Even though I would have been delighted to see Kelly hang around, and the idea of avoiding the entire Flutie-Johnson era is quite fetching, we should not forget:
1. That during the 1996 season Kelly had suffered a serious hamstring injury that cost him three games and left him largely immobile even after his return.
2. That, partially as a result of his injury, Kelly took many more hits than he had before, leading to comments about his "statuesque" qualities.
3. That Kelly committed several costly turnovers in his final games (including an ill-advised shovel pass in the playoff against Jax) which raised questions about his judgment.
4. That Kelly had feuded openly with the coaching staff over their desire to move away from the K-Gun, a system for which the team no longer had the personnel.
and finally...
5. That the previous 4 issues, combined with the strong play of Todd collins (I know, I know, that sounds weird, but it was true at the time) in games against Dallas and the Colts, made many think that it would be easier to make the transition than it turned out to be. Such an opinion was widespread among both knowledgable football people and on barstools and nascent internet discussion boards across Bills Nation.
You would have had a hard time finding anyone who would have argued in favor of a three-year extension for JK after 1996, and most people agreed it was time to go. Alas, most people also though that Todd Collins would make it as a pro QB. Most people were mistaken. That was, however, as in most such cases, due not to lack on intelligence or ill will, but due to the simple fact that most people, even multimillionaire club owners, cannot predict the future.
Go Bills!