I'm not certain how much the Bathurst cars are slowed by left turns in the area that you are suggesting, as I don't ride the 511 that often. But, overall, I like your idea to relocate streetcar tracks out of turning lanes where possible. Just as long as cars backing into, or out of, parking spots doesn't become the new headache, of course!
I think that the 502 and 503 could be merged under the "Kingston Rd" moniker. Off peak, weekend, and holiday service could utilize the current 502's entire routing with a focus on the Eaton Centre- City Hall-Queen West neighbourhood / retail area. While Monday to Friday peak services could turn south onto Church from Queen and utilize the current 503's on-street loop of Wellington, York, and King in order to serve the bulk of the office workers in the area.