This is the logic being discussed, right?
1. As of right now everyone has come to know, through some means or another, that everyone knows that #101 sees blue
2. If (1) is true and if I do not see blue then I am blue and will leave this evening
3. If (1) is true and if I see 1 blue then if he does not leave this evening then I am blue and will leave tomorrow evening
4. If (1) is true and if I see 2 blue then ...
...
And it bears repeating (if any reader missed the previous comment), that even though as a practical matter (1) is true in counterfactual scenarios (2) and (3) only if someone says "I see blue" isn't that someone must say "I see blue" in every counterfactual and actual scenario for (1) to be true and for this reasoning to be usable.
But we already have a simple, straight-forward case that this logic doesn't work. We know, because he's already acknolwedged, that 2-blue-eyed doesn't work. 2 blue-eyed people cannot leave on the second day.
If it's true that 2 blue-eyed people cannot leave on the second day, then it must also be true that 3 blue-eyed people cannot deduce that there's more than 2 blue-eyed people just because they don't leave on the second day. So 3 blue-eyed people cannot leave on the third day.
But premise 1, "everyone has come to know, through some means or another, that everyone knows that #101 sees blue", is true in the case of 3 -- and yet it still doesn't work.
So we have a tangible, specific case where Michael should be able to apply this logic, and yet can't.
It genuinely feels like these simple cases, for low numbers of blue-eyed people, are being ignored because it's easier to hide the reasoning behind the obscurity and confusion of very large numbers. The beauty of unenlightend's logic is that it clearly unambiguously works for small numbers, and so we can work our way up to large numbers. In contrast, Michael's logic, we know for sure doesn't work for small numbers, so instead of working his way up to large numbers, he just kinda ignores the problems at small numbers and hopes nobody notices the gaps in logic once there's 100 people to talk about. It's easier to hide the cracks with so many blue-eyed people to think about.
If Michael wasn't so worried about getting tortured for eternity, I'd be encouraging him to find the lowest number of blue-eyed people that it works for. Michael it's only a fictional torturing for eternity.