I am still concerned about the lame duck status of the chancellor... in an ideal world the search committee would compliment the chancellor and help screen applicants before a decision was made (the BOT meeting should never be more than a rubber stamp)
to me, actually identifying potential AD's is an issue... Babs can't do that, the committee isn't really set up for that either... this is actually where having a search firm is useful because a decent one could help find who is looking to move up. My concern is that they're going to be sitting in a conference room calling the Colorado Athletic Department, and then after being hung up on calling down to Charleston to see what Tom Michaels is up to. (it won't be that much of a farce, but you get the point). I don't think you can expect a volunteer board to cull all 360 athletic departments and know who's a riser. Hopefully those people apply for the job (they'll obviously know about it) but being able to made a connection helps.
Where I work we've used similar formats where we have an interview panel that is made up of residents and stakeholders, and a separate that is made up of employees (both under the individual and in other departments). It works well and I think there is very real value to having a booster, a coach, an athlete, etc sit in a room and size up each of the finalists... they also exist to lend credibility to the final choice.
If they will be used to do that, this is a good move (it's too bad we didn't start this back in September/October)... if they're expected to do most of the legwork and do 80% of the work once HR drops some resumes on a table, I'm a bit worried.