Of course 2001 was Austins year. Just because he was a heel for the majority of the year doesn't mean he wasn't the top guy still. He had bigger crowd reactions leading up to their WrestleMania match and as heel was the focus of pretty much everyshow. So yeah 2001 was Austins year. Kurt angle as good as he was 2001 wasn't at Austins level. And Austin turned heel because HE felt stale and wanted to change things up a bit. Fans were still going crazy for him but HE wanted a change and one of the reasons it wasn't successful was because the fans still wanted a face stone cold. He was more over then rock leading up to WrestleMania. It thought the time was right because the rock was hot that fans would turn on him more. He did not turn heel because the rock was more over then him because rock left after WrestleMania so that doesn't make sense. He thought because of rocks popularity and him feeling stale he could turn heel.
Well, Austin DID get stale after his fued with mcmahon ended, and the original plan was to turn him heel by late 1999, but that didn't happen due to the neck surgery.
His heel run failed not because the fans refused to boo him(which is another lie by the WWE), but because he's got more more of an anti hero type of character which is in between heel and face.
As for him being a favourite, before Rock failed attempt to attack austin from behind(Rock bottom) which is a coward'ish thing to do, Rock was slightly the favourite. You can tell, the night after NWO when the two had their little confrontation, Rock outpopped austin. The same thing happened that same week on smackdown. They were having a promo with kurt and the two had a little staredown and during that staredown there was a huge rocky chants going. The fans didn't side with austin till rock failed once again to bait austin during his match with angle I believe. Oh, and by the way, considering that WM X7 was in Austin's homestate, Rock got a pretty damn good reaction from the crowd.
..And yes, he did say he felt comfortable turning heel because Rock was the top guy(according to Steve)
Back to the 2001 thing, It's not about Austin being a heel, Angle simply had a better all around year. He had alot of great matches, and basically his all around performance was gold from start to finish, and just like I said earlier I don't think anyone had a year, where at one point he was the top heel and at other point he was the top babyface. After the 2 weeks off(after he lost the title), austin was simply not the same.
IMO, Angle should've been the one to main-event WM X8 with HHH.