I have already touched this subject in the following post
http://www.theroyalforums.com/forums/showpost.php?p=906328&postcount=21
As per Pikul's account in "Evil Power", Alexander III had a discussion with then Tsarevich Nicholas explaining him that he might be unsuitable to rule Russia and asking him to wait for Grand Duke Mikhail to come of age and settle down (i.e., marry) and then abdicate in favour of his brother.
As mentioned by to my history teacher, the possibility of Grand Duke Mikhail becoming an Emperor was discussed in Russian high-society salons and then mentioned in diaries of some Russian nobles.