Yes, I firmly believe all Hart had to do was not screw it up.
I would typically agree with you, however, I'm not sure the facts fit the scenario here. The bare bones of negotiation are "I have something you want, you have something I want. Now let's make a deal." And to use the term "fantasy land" might happen behind closed doors during negotiations, but will never be said directly to the media in reference to the other party. Why? Several reasons:
It sets you up for failure in said negotiations. If he was to represent some other party (according to Wiki, Lamonte reps something like 40+ guys) to the Vols in the future, he would have to contend with what he said right then. Any negotiations between him and UT are already hostile from the start with quotes like that. So while you can say things like that over a table, you for certain don't go spouting them off to the press afterwards.
It sets you up for failure in future negotiations. Again, representing 40+ guys means he will have to deal with other teams in the future. Making comments like this and the other teams are already on the defensive since obviously they are dealing with a royal douche. It's not good business. You want to go into negotiations on as neutral a ground as possible. If either of the parties start off as hostile, that makes for a long negotiation.
Third, it tends to piss off potential clients. Think for a second, some guy wants an agent, sees Lamonte, knows he's a hard negotiator, but shies away because of his lack of good common sense and general control of his mouth in the media. You lose clients because of that especially if the client tends to like who you are negotiating with. (assuming Gruden likes UT to begin with)
Negotiating is an art and for sure you don't go back to the press with "those idiots at UT are living in a fantasy world" especially if negotiations may or may not bear fruit at a later time. And even if Hart did something behind the scenes to upset Gruden/Lamonte, for certain it will/should never hit the papers except in rumor or "my source says." If he wanted to kill the deal, it's dead by saying "my client is not interested in coaching at this time. Thank you for your consideration." Keep getting calls (which I would assume he gets a lot in reference to Gruden) you put out a press release "my client Jon Gruden is not interested in coaching at this time." Nothing more, nothing less. Get a phone call about it? "My client is not interested in coaching." and for damn sure nothing about a specific team that contacted you...
Now furthermore...about this whole "I got a call from Dave Hart and told Tennessee where to stick it." That's not the agent's job. They are a conduit of information from the person being contacted to the interested party. "Hey Jon, got a call from UT today...yeah, said they weren't interested...okay, see you in a couple of weeks...later." They do NOT go on record by saying "we were contacted and told Tennessee wasn't interested in us and they live in a fantasy world."
Just...not...done.
And again, we look at the question, which again is puzzling, of why even speak to it? What is there to gain by saying "Tennessee is in a fantasy world" knowing full well you are talking to a reporter and it's going on record?
No reason whatsoever.
Again, smoke and mirrors. Throw off the scent to someplace else. Get folks looking into other things. The media tends to have a serious case of ADD and will go after the shiny things if they can't get a story. Jon Gruden maybe to Tennessee...oh look at that, Alabama in the BCS Championship...oh, oh, oh bowl games matched up! They get distracted by other news and forget about that whole silly Jon Gruden to UT thing pretty quickly.
Throws off the scent long enough for whomever to negotiating to finish up, relatively free and clear of pressure from the media. Plausible? Sure. What's actually happening? Maybe. But again, you are a super penile implant behind closed doors where you can get away with making comments like that. But certainly not when speaking to the press knowing full well it's going to get reported.
Fishy smell over the whole thing? Absolutely.