Harbaugh isn't exactly defending Rudock as having played great, merely that he is clearly Michigan's best QB. The arm chair "put in the backup" thinking of some fans at Michigan fails to realize just how truly terrible the other options are right now. Shane Morris is a junior and the backup with career numbers of 43/87 for 389 yards (well under 5 YPA) with 0 TDs and 5 INTs. Michigan's best options going forward are all either ineligible b/c of transfer rules (O'Korn) or true freshmen (Gentry, Malzone) so it's basically Rudock or not much else this year.
He is what he is. He isn't great, but he's adequate. Michigan might be good enough to win 10 games with him merely being adequate which would be fine and dandy. Harbaugh is great at coaching QBs so long term they will be fine.