TheTruth is actually correct for once. It is about everything but basketball. It's a rivalry built out of hatred of an inner-city school filled with mostly black athletes, while cherished UK still was proud of having a mostly white team. It's about the city of Louisville, which has a large minority population playing against the rest of the state which is nearly all white. Throw in the rabid racists in the mountains and in southern Kentucky, and you have the reason why this hatred exists outside of basketball. Louisville is proud of its progressive tendencies while the rest of the state is proud of it's backwards tendencies. That's how this hatred all started.
That's why until Tubby became the coach at UK, you'd be hard pressed to find ANY black Kentuckians who actually rooted for UK. That's a fact. Go to a Rupp game and you'll find the it's almost ENTIRELY all white, despite the fact that Lexington has a sizable black population. It's utterly amazing. When The Barn has more black people in it than Rupp Arena, that's pretty sad. Gopher fans, the next time you see a UK game on TV, I challenge you find a black person in the crowd. Try it out! I swear, I went to a UK game with about 23,000 fans and I saw about 4 black people (in a city as big as Lexington).
So that's pretty much the root of the rivalry. Of course nowadays, both teams are nearly all black, but the hatred between the fans exists for those reasons. The 2 schools didn't even play each other until 1983, but why did UK fans hate Louisville so much when they didn't even play them? That goes to show you how it had nothing to do with basketball and all about demographics.