Yes, the Colts plan on drafting him. Or more specifically, a QB which we can assume will either be him or Griffin.
This could also be spin to drive up the cost of the pick. I know they've said it, but that doesn't necessarily mean it's a slam dunk.
In any case, 28 million to Peyton + roughly 25 over 4 or so for Luck. While Irsay's pockets are deep, I dunno if they're deep enough to do this. From what I've read, if the Colts sign PM, they're "stuck" with him for at least 3 years due to the cap issues created by Polian.
Also, if Luck is the greatest thing since sliced bread, there is no way you sit him (Or Manning in favor of Luck) for up to three seasons. One way or the other, they have to choose one.
As to those saying they must rebuild if they keep Manning and plan on a run in 2-3 seasons... you do realize they've been just as pathetic on other areas of the team when Manning was playing. IE - If Manning is healthy and if he remains a Colt, their win/loss percentages change drastically.
To me, they have to make a choice. Keep Manning and make it the story book ending that it should be. Or release Manning and start retooling.
If they keep Manning, they should pass on Luck and trade the pick. Perhaps bring in Blackmon after trading down to replace Wayne. Take a promising young QB around 2-4 rounds and hope that he's ready when Manning hangs them up.
I can see them going either way, but I really can't see him putting that much money on two players that cannot both be starting every week.
Personally, I'd like to see Manning come back healthy, and they trade the pick for 3 or so prime picks (rounds 1-3 or 4). Bring in help everywhere you need it.
If he's still questionable, you have to cut him and take Luck.