Since you ask, 'sing,' I think you've overlooked the key issue: Morrissey needs a very good guitarist and Boz and Alain don't fit that particular bill.
Given that Whyte continues to write beautiful songs for Morrissey with his rare melodic gift and sense of occasion, why bring him back into the band? His chief gift lies in writing sublime songs, which he is doing. By bringing in Butler, you instantly revitalise the band's sound, add some dynamism and virtuosity , as well as bring in new ideas and a second great songwriter. Isn't that logical?
Only the parties involved know the real story but Butler was asked about it in some interview. He said he declined because he was too busy getting The Tears going at the time. He claims he was the one that recommended Little Barrie for the position who was in the band temporarily until Jesse was hired full time.
I too would like to hear some Moz/Butler output. If you ask me, the Tears weren't bad because of Butler...they were bad because Brett horrible lyrics (did that guy run out of things to sing about or what?) The music on that Tears album was excellent. At least a Butler produced album might be interesting.