If you have watched the QB play by having CL run the team for 9 weeks he has pulled away from any equality they may have had at the start of the season. quite evident even in the mastery of the huddle and play calling, that Laviano is way ahead of Rettig.
Your point is valid about McDaniels he had to go against Meyer, Harbaugh and Chryst. I can say 2 out of 3 of these coaches may be the best coaches in college FB right now. And yes McDaniel is getting schooled by great DCs.
I'd hope that if you took two equal QBs and gave one 80% of the practice snaps and 100% of the game snaps, that he'd improve at a faster rate compared to the other. Unfortunately, after 9 games, it appears as though he's regressing - whether that's to do with coaching, talent, or otherwise. If Rettig had been given the same focus, I'd hope he'd be ahead.
It feels like Flood is chasing sunk costs in Laviano at this point. He can't get back the time he's put into Laviano to give it to Rettig, and he is afraid that he's put Rettig far enough behind the curve that he won't be competitive right now... so he's sticking with Laviano, because he's already invested so much in him. That's a terrible reason to stick with one option over the other.
Unless, of course, he already feels as though he'll be gone next year. If he was planning for next year, it'd make more sense to take some potential set-backs mid season this year to get Rettig on track for next year. If he is playing for this year only, without any eye toward the future, it'd make more sense that he doesn't want to risk any setbacks as Rettig gets up to speed.
Either way, he's stunting the development of his backup QB by not giving him any meaningful snaps - even in blowout situations when he could have easily seen time in the 3rd quarter, or may have provided a spark/change/whatever to get the team motivated to compete in a second half. At a certain point, the coach has to come out and take the ball away from the starting pitcher and bring in relief.