Most major cities are built around a central 'theme'. Yes, if UT wasn't in Knoxville, Knoxville wouldn't be what it is today. On the same note, if Vegas didn't have casinos (and UNLV) would it be the same? Would Warner Robins be the same if the military base wasn't here?
Again, you're correct about UT's significance to Knoxville, but no city would be the same if you removed its main focal point(s). Point is, if you remove the casinos (and UNLV) from Vegas, what else is there to do? If you closed down Robins AFB, what would this town have left?
Now on that same note, if you took away UT from Knoxville, and as others have mentioned, you've still got the river, the smoky mountains, an awesome climate, camping, Gatlinburg/Pigeon Forge up the road...
I'm not saying the area has everything or is the best place to go in our nation, but there's a heckuva lot more to do than a ton of other places around the states, and as such, it makes Knoxville a pretty great destination. Not to mention, if Knoxville wasn't a college town, it'd probably have a much higher population. Given this, you might not have as many pieces of eye candy and drunk guys walking around in a central area, but the city would instead be stocked with gorgeous women of all ages (18+) living their regular humdrum every day lives.. except, these folks would have more to do on the weekends than simply go to a bar or playing disc golf.
I'm drunk.