I think that Kaepernick can certainly still play in the NFL and make a roster, but his athleticism that made him such a special talent for a couple of years is now gameplanned against effectively by NFL DCs. I think that he could still be very effective in an RPO based offense, something like what you see Philadelphia doing. But when he went against an elite defense like Baltimore in the Super Bowl he was shut down. The same thing happened in the 2013 NFC championship game, he was shut down by an elite Seattle defense. The role of a dual threat QB is changing in the NFL with the RPO being a much bigger facet of offenses that feature mobile QBs. Would the 49ers have made the Super Bowl with Alex Smith? Hard to say, maybe, maybe not. Alex Smith was playing at such an elite level before he suffered that concussion.
But to your point, I absolutely think that Shae Patterson will be a star at Michigan. The pace and matchups in the college game favor offenses that utilize the mobility of athletic QBs. Harbaugh can easily tweak the offense to suit Patterson's skillset. Also, I'm so excited to see what Helton, Friend, and Osovet do to open up the passing game at UT. A pro style offense that incorporates the RPO would be tailor made for a QB like Harrison Bailey.