One advantage of having more OOS kids enroll is the higher tuition rate that they pay, so long as you don’t give lots of merit money to OOS admits; some schools have this as a business model (see University of Michigan, for example).
I do have concerns about increasing the on-site student population at UTK, based not only on a housing shortage for non-freshmen, but also on the quality of educational experience for all the “live” students (as opposed to online students). The dollars to pay for all this aren’t unlimited; and I don’t want a WVU meltdown in the future for UTK.
I really wouldn’t mind a limit or cap on the residential and commuter students at the UTK campus. I think that the good students who might get shut out of UTK would find their way as overflow into the other UT system campuses (such as UTC or UT-Southern), or the THEC schools (such at ETSU, University of Memphis, or Tennessee Tech). Could be a win-win for higher education in the state.