I don't ever remember calling Elway 'stupid'.  I don't even think I questioned Elway's ego.  My point is this.  I think Elway made a monumental mistake when he drafted Lynch (other GMs have done the same mistake).  After 2 training camps, I am of the opinion that the light bulb will never click for Paxton.  In another year or two, he will join the trash heap of 1st round QB busts.  
By divine providence, Elway got an opportunity to correct that draft error with an undrafted free agent in Sloter (without having to use a draft pick).  And for whatever reason, Elway and the Broncos decided they were not going to give Sloter that opportunity.  Jamal Carter got a fair shot to make the roster (as a UDFA) at the expense of Ward.  There was no talk about Carter playing against 3rd stringers or how it will be different in regular season games.  Sloter showed as much or more than Jamal Carter.  But he did not stand a chance because like you said "it is not a level playing field."