There's virtually no way Halliday could make the Chiefs active roster with Alex Smith, Chase Daniel and Aaron Murray already on board. That's not to mention Tyler Bray, who remains injured.
So I'm guessing this would be a potential practice squad spot. SB Nation's Washington State blog, Coug Center, writes this about what Halliday has been up to:
Halliday mysteriously "retired" from football back in May after abruptly leaving Washington D.C., where he was scheduled to begin his career as an undrafted free agent with the NFL team there. While it seemed hard to believe at the time that he could be totally recovered from his awful broken leg and still just give up the game, Halliday offered no explanation, and Mike Leach even said at Pac-12 media days that Halliday really had just walked away.
Whatever was going on then -- was he burned out? not fully recovered? suddenly offended by Washington's mascot? -- it appears to be resolved now.
The Chiefs will have a decision to make with Tyler Bray in the coming weeks. Roster cut downs are on September 1 and again on September 5.