He will be in the frame, but its hard to see how anyone apart from Dalglish would have him as assistant; it would be like Caesar adopting Brutus. Also I think the contract issue is more about playing time than a coaching role, B-Rod would probably love to fob him off with working with the ressies / kids as he wouldnt have to then deal with explaining every week why he wasnt picked.
Though saying that I am not sure that even them would just give him the managers job straight away. Yes, its never easy to state who would and who wouldnt be a great manager until they do it, but he has never struck me as someone who has oodles of tactical nous.