I'd guess that he relies on Harry for valuation. Unfortunately in the case of players like Keane, Harry could hardly say he's worth nothing as he thought he was worth buying a few seasons back. Ditto Crouch, Palacios, Defoe etc. In a way I agree with that as if the manager requires the club to stump up millions for a player he should be held to account, but it doesn't help in moving on the mistakes.
The only half-way logical thing I can come up with, is that, maybe Levy & Harry intend to sort of put these players in the "shop window" via the Europa League; and hope that attracts some interest in them. Otherwise, I can't believe that Levy is naive enough to believe everything Harry tells him. He's gonna end up in deep ****, if he does.
At City, he's had bust ups with Toure - which supposedly stems from their time at Arsenal - and Kompany. Of course, if he starts throwing his weight around, we can just cancel his loan, and he'll be stuck in limbo until the following transfer window.