If all of those things are true then why, may I ask, did he fail to make any impact at all at Blackburn? They clearly don't have a great deal of better options than a guy who apparently is good enough to get games at City given they've spent the entire season in the relegation zone. Surely the point of a loan move is to give players much needed first team experience, and to assess how they cope in "real football" which is a far cry from youth football. Byrne succeeded in Holland to a degree, although Holland is renowned for making players look better than they actually end up being, but you can't call his time at Blackburn anything other than a disappointing failure. He'll have been assessed when out on loan, coaching reports, match reports (for the few times he got on the pitch) etc and those reports can't have been favourable.
We've spent a shit load of money on our new academy. It makes absolutely fuck all sense for your comment "Clearly, hardly any are going to get a chance" to be true. Why spend hundreds of millions on an academy, stock it with players, spend years training/teaching them only to sell them on for not too much money in the scheme of things, and so it all again? We have a sizeable coaching staff, at all age levels, isn't it far more likely that those coaches have over the years, and also over the past few months, assessed Byrne and decided that, although he clearly has some talent, it's talent that isn't going to progress to the point where he'd be able to make a real difference to a title challenging side with the aim of being the bets in Europe?
Your argument is the same each time, "we didn't give them a chance". However your version of "giving them a chance" is always "play them in the City first team and see if they sink or swim" like that's the only proveable way of assessing a players potential. The club, like most clubs, seem to be taking the "watch them for years in the youth setup, send them out on loans, and assess them" approach. I'm not sure why you seem to feel that your method is the right one and the one chosen by the club is so fundamentally flawed, as with most things I'm more inclined to trust the professionals when it comes to their approach then the keen amateur.