You summed the situation (re. Morrissey's need to surround himself with people who are in awe of him) up perfectly, here. He needs people who won't always defer to his opinion; having people in his band who just do as they're told has led him into the creative cul-de-sac he's been in for most of the last decade.
Not a huge fan of Butler, but I do like quite a few of the early Suede songs (particularly on 'Dog Man Star') and the McAlmont & Butler songs were good too, so maybe it could work. I seem to remember reading that Butler is a bit of a control freak in the studio and I think, where the music and the arrangements and the production are concerned, Morrissey NEEDS that. He needs someone who knows what they're doing to exercise a bit of quality control. Somehow, though, I can't see Morrissey going along with that arrangement. He would see that as beneath him - regardless of the fact that the last 2 albums show that he hasn't a clue what he's doing.
Musicians I'd like him to work with again are Craig Gannon, Johnny Bridgewood and Woodie Taylor. I accept, though, that none of those have the kind of 'gravitas' to command Morrissey's respect and make him listen, so Butler could still be the one. Alternatively, that guy who was Robbie Williams' co-writer for years would be a great (Guy somebody?). Disregard his association with Williams and you have to admit, he writes some cracking pop tunes - tunes that Morrissey badly needs.
Oh well, it's his career to wreck, his own way.