Everything you say is true.
Last year's team is a great example. Early in the year they lose to Louisiana State, then blew an 18 point lead over Ohio State and lost, but then they beat UCLA, got swept by Purdue but beat the Boilermakers in the Big 10 Championship game and beat Michigan State 3 TIMES.
This past weekend they beat Holy Cross, but not in a very dominant fashion, and they have a Wednesday meeting against Villanova. A game they will more likely lose.
As you said, we shall see how Michigan finishes the season. John Beilein has gotten the Wolverines to the National Title game twice, and I think that he will win a National Championship eventually with this school. Maybe not this year, but you never know.