Interesting idea, but I don't think the FCC would go for that. (at least not without some plan to return other broadcast frequencies to the communities that would be losing them.) I could see 99.1 possibly getting cut, since Loudon has 2 FM allocations, but 99.3 in Jefferson City would probably have to be replaced with something else.
Anyway, as far as upgrading 98.7, I don't know how it could be done either. 98.5 being a full class C in the Tri Cities, is hard to get around. I doubt there is anyway Citadel can get a bump to C2 on that frequency. Only thing I wonder, is how tight the spacing/distance is in regards to the adjacent stations. Could they possibly move the city of license a bit closer to Knoxville to allow 98.7's transmitter to go on top of Sharp's Ridge? If so, a C3 from the heart of Knoxville, would have much greater penetration and coverage than their current transmitter location. But, just how far can city grade coverage go with a C3, 25kw signal? The city of license would have to fall under city grade signal strength to allow it. But one plus in moving the city of license would be the fact that Oliver Springs has 2 FM allocations (98.7 and 106.1). The FCC would be more willing to let them move the city of license somewhere else (providing the spacing with adjacent signals works out).