To me it is so clear that Kubiak wanted nothing to do with Peyton at any point, and wasn't too high on Brock either. They were kind of screwed with Peyton, though. Kubiak had turned down Peyton when he wanted to come to Houston in 2012. He wants a QB that can move. Too bad Tyrod isn't a FA until 2017
That's a bit of a projection I think.
Elway and Kubes know that Manning is a misfit in this offense at this point in his career. Elway knows that at 39, it's easy to get hurt or knocked out of games.
So you have a misfit in the system, who's old, and who is very highly paid given the requirements of the offense.
Taylor fixes all of those problems. He's familiar with the system, cheaper by miles than PM, and most of all young. He's also competition against Osweiler .Tyrod and Osweiler are both good fits in the offense, they both would have been good insurance against Manning not completing the season, and competition against each other. Win, win, no matter who starts out of the two, since they are both pretty close to what Kubes ultimately wants.
I don't really think it's a matter of them not being high on Osweiler. I think it's more of hedging their bets against Manning being able to adapt or complete a season. They had to go with Manning had he decided to come back, there was too much money on the line, and very little leverage to walk the salary down.