I don't believe Kelly will be paid off as I think the board and Kelly will be keen for him to revert to a backroom role, remember he will have built quite a bit of loyalty up after last season.
As for O'Leary, whilst he has managed at the highest level with Leeds in the Champions League, I am not convinced he is the type of manager we need at present. I would prefer a Manager who has a proven record and experience at this level, my preferred options would be :
Steve Cotterill (Although I doubt we can afford him now)
Brian Little
Joe Royle
Nigel Worthington (If and when he is sacked by Norwich)
George Graham (Might just fancy another crack back at management and would no doubt sort out the under performers)
Graham Rix