I think Flynn, just like many folks figured Pete was just paying lip service to the whole compete idea. It most likely wasn't until Pete announced the 3-way battle that Matt started to see the madness that is Pete Carroll. When he signed it was just Tarvaris and Josh, so most likely figured it was a no-brainer that he was going to be the starter.
I always got the impression things got awkward during TC as the competition drew out. I wonder if the whole "Teacher's Pet" thing that Hugh spouted didn't start with a frustrated Matt Flynn? Just my tin-foil hat on. I was a fan that wanted Flynn to win the starting position because I was leery of starting a rookie QB. Once the decision was made, as a company man, I wanted it to succeed.
Glad something good came out of the change. Did Flynn's experience here screw up his confidence or is the Raiders current configuration not conducive to what he needs to succeed? Don't know.
If he cannot find a nice backup role somewhere, at least he got compensated for missing out on an opportunity to start somewhere.