Coaches don't always deserve the benefit of the doubt, but I really think it's taking some leaps to imply that Pitino isn't a good coach because Lofton was dismissed from the team. As you said, nobody in the know can legitimately tell the tale of what occurred, but given the concerns about Lofton's attitude dating back to HS and his not-very-straight-line matriculation to the "U", one could imagine that Pitino's conversation on accepting Lofton onto the team involved some pretty defined behavioral expectations. From the reports of Lofton's body language at the first scrimmage (and Pitino's frustration with that body language), perhaps Pitino brought him in for a come to Jesus meeting and Lofton's reaction indicated he wasn't on board. As others have said, team chemistry can be a tenuous thing and a coach certainly doesn't want to deal with a transfer/redshirt bringing that baggage onto the squad.
Given that Lofton's purported love/desire for the hometown team was so strong and that Lofton would be sitting out this year regardless, it really makes me wonder why Lofton was carrying around any animosity towards his position on the team. If all of us are bemoaning the fact that the scholarship possessed by Lofton kept the Gophers from bringing AI or another top notch prep from '15 onto the squad, I imagine Pitino's even more frustrated that this didn't materialize; from his quotes earlier in the summer, he spoke quite glowingly about Lofton's ability. Disappointing all around, but at this stage I feel like Pitino deserves the benefit of the doubt.
One more thought. . .in the pool, I've got Lofton landing with Iowa State. Any takers?