Due to the speed of this going through, I'd guess Milan paid money to Liverpool for him to be released.... probably equal to the amount settled with Benitez's payoff.... that's what usually happens.
I heard Daglish's name knocked around .... none of the 'old' Liverpool players are great managers, however they would put the heart'n'soul back in the team that Benitez managed to get as close to zero as you can.... whoever it is he'd better be English and understand the passion....