Nope, Mike Smith wouldn't have been cut in that situation.
A Student-Athlete gets 5 years to play 4, they can't penalize you just because you graduated, not unless they wanna get sued.
Actually, Mike exhausted His eligibility, red-shirted His true freshman season and saw action His last 4 years. Scholarships are basically guaranteed, but playing time isn't.
A coach can't cut a kid if He/She doesn't perform as expected, the NCAA passed that rule 5 years ago. Think about it, when's the last time that you know of that we've Steven Wesley'd a kid...