Ignoring blue calling the players trash..I think in the words of Jose Mourinho he meant to say we were a bad omelette

But a point to make, about Danny's thing about SAF...he has only 2 formations like Bluey mentioned: 4-4-2 and 4-5-1.
The thing is both these formations are inherently flexible during game time. So sometimes you will see it miraculously become a 4-3-1-2 and sometimes a 4-2-3-1, and sometimes even a 4-1-4-1. The whole concept is, a team starts out one way, but then have enough players to make the changes in-game.
Even when SAF brings in substitutes, they're rarely HUGE departures from the players he put on in the first place. For eg. He might take off Nani, and put in Park. But Park will continue to play on the left, except Park's plus is in his graft and not his guile.
Also the reason why sometimes Park starts in the middle, along with Carrick, at which point, Nani and Valencia are told to go crazy since Park covers the space they leave. Sometimes Rooney is sole striker, sometimes Scholes/Giggs play in the hole, sometimes Rooney plays in the hole to supply Berbatov (if they have two strikers)...but most of this happens in match.
Now the whole problem with Milan is it is still Carlo's team. Meant to play a 4-3-1-2 or a 4-3-2-1. And both of them depended on Kaka. Sometimes Kaka was a second CAM, sometimes he was SS, with Seedorf moving into the hole. It was limited, but till Kaka's huge dip after the injury it was still very strong.
Leo has tried to make a new system a 4-3-3. Even that changes during the match. Only r80 really has that free role on the left. Sometimes you see Pirlo push up to be treqqie (which is when I feel we are most lethal). You have Flamini and/or Ambro sometimes holding back as DM (when Pirlo is up)...or sometimes rushing into the box, when Pirlo is marked and the box is congested.
You would have Beckham playing a RW, and then suddenly drifting into the middle to find Pato, since Pato cuts into the box as well. And then there's the very Brazillian thing of having T.Silva rush the opponent's half. Suddenly making it one more extra man in the half, which can be very deadly.
All these things don't just come up like snap. They require a lot of work in training to make all these various chemistries work. And they have worked. It doesn't help when all of a sudden, the players who give you the strength and the flexibility are out. It's like the ground gets pulled beneath your feet. I'm talking of: Nesta, Pato, Beckham mainly. Seedorf got injured just before that XMas period when he was just playing terrific. Borriello would get injured when we needed him the most. And now that he's fit, he's not doing what he used to. Nesta being injured means that Silva can't push in like he did, leaving Favalli on his own, and if he does, we're susceptible to the counter attack. Favalli's positioning is good, but not even close to Nesta-level.
You don't think the chemistry between R80 and Antonini just happened did you? Antonini is not even someone who I'd call gifted. It's obviously training.
Do we need tactical flexibility for this team, yes. But we don't have the players. Right now it's kind of like making a truck engine go fast. And Leo has done all the tuning he can.
When you say alternate formations you're falling into the trap of 'anything but this'. Often that 'anything' turns out much worse. How many times in Italy do you see one coach being fired, and then they hire another only to fire him and get the old one back? And no it's not just Zamparini. You have Udinese etc. do it as well.
We started the season with the 4-3-1-2...btw..which is exactly the formation you have suggested for this match. Seedorf on the right, and cutting in the middle, R80 playing as SS or in the hole, or on the left. We got KILLED. If we hadn't started with it and instead with the 4-3-3, we'd be top of the table right now. But it took Leo about 3 months during an active season to find this new formation, and he did.
I think he's done a great job..and he should stay. His points (if they're true) are valid and reasonable. In fact I suspect that's why Carlo left as well. When Galliani says we had a discussion with 'my friend Carlo' on the direction that we wanted the team to take, and decided to part ways amicably...I'm pretty sure this is what it is.
Carlo probably said, I don't have the system to play R80, give me Ribery or something like that.
Great coaches, will always want the players to suit their system. Mourinho has done that this season, and he's managed to go one round further than last year in CL. The scudetto last season was nothing. Most of the teams were still weak.
And to end: Sacchi said, Leo is the only coach to have brought any tactical innovation in this year's league. That's good enough for me.