Has Joe ever written about what happened there? Things were going pretty badly on the pitch but I don't recall any calls for Joe to go at all, as you say there was a feeling that he could turn things around, and it came out of the blue. Seemed like a foolish bust-up that Johnson allowed to become a resignation issue, which was idiotic given he had no clue who to replace Joe with.
He does briefly in his autobiography mate. It is a fascinating read. Southall writes about it too and it's interesting to compare and contrast.
The story goes Royle went into the meeting thinking he'd be sacked while Johnson went into the meeting thinking he'd resign. Neither really wanted the eventuality that happened but the inaction of both ended up meaning Royle went. For me Johnson was guilty of poor leadership and probably not recognising that Royle probably just needed to be told he was still wanted as opposed to wanted to turn it into a resignation issue. I am not a fan of Kenwright but this has always been one area he excelled at and if he'd have been in charge I have no doubt Royle would have stayed.
I think Joe was getting caught up in a spiral. I remember some fans were concerned with the results but certainly no mass calls for him to go. It was different back then, people were more patient. I think people also gave allowances and were aware of concrete factors that make management difficult. Kanchelskis had his head turned, Fergusan became injury prone, Parkinson got a bad injury. Those 3 were central to Everton (Parkinson on the brink of an England run). People were probably a bit more clued up back then and willing to give allowances.
Then when you factor in alongside that lads like Limpar, Horne, Ablett, Ebbrell all had to be moved on due to age catching up with them, as well as crucially Watson and Southall you could see how a storm began to brew. Everything just seemed to happen very quickly. It was always an ageing squad but a lot seemed to become over the hill at a similar time and lads in their prime got injuries. As has been suggested Johnson then failed to get Nigel Martin across the line and wouldn't sign Flo.
Running concurrently to this Royle was becoming paranoid. He banned the local press and became suspicious of Southall for leaking information. I think he lost a bit of control. We should have just calmed the situation down and had some clear recruitment in the summer. Johnson wasn't capable of this leadership though and seemed to agitate Royle further rather than steadying the ship.
It was bizarre looking back. We went from trying to sign Alan Shearer to signing John Spencer in 12 months. In the opening fixtures of 1996 we were fantastic. We hammered a Newcastle side that was tipped for the title on the opening day. We then went to Old Trafford and for 45 minutes dominated Manchester United. I can count on one hand the number of sides who have done that to them. They just couldn't handle Kanchelskis and particularly Fergusan. It didn't seem possible within 18 months we'd be where we were.
I have no idea if Royle would have turned it around. However it was awful management. It should have been seen we needed some players and to calm Royle down. We should have also known we had a lot of promising young lads coming through the academy waiting to be blooded over the next 3-4 years and someone like Royle would have been ideal for this.
As a slight aside and relating back to them premise of the original post I suspect our biggest mistake was not going to get Cruyff in 98. When you consider was he had built and Ajax and building at Barcelona getting him in ideally to work above Royle would have been magnificent and perfect for us given the young players we had. While I doubt he could have turned us into a modern day Barca (we have neither the tradition, wealth or talent pool) we had some fantastic young players in our youth set up in the late 90's and the academy was starting to kick into gear. I think he'd have transformed the club over the wasted years between Royle to
Moyes and probably turned us into a side that competed for honours.