He would have been out of a job next season anyways. Harbaugh just wasn't convinced Kaep is ready, but he is now.

This is a coach that was putting Kaep in there for several plays a game. Who else does that besides a coach that doesn't respect his starting QB?

Harbaugh knows Smith is not a good QB, but he is also confident enough in his coaching ability that he could make a turd like Smith into a serviceable game manager. But that's not what he wants. He want's another Steve Young. Very possible that Kaep can get near that level with a coach like Harbaugh. Probably why he took him over Dalton. He wanted a guy with all the tools, no matter how raw.