Roughly ~1km spacing is standard in Toronto, despite what you read on Steve Munro's blog about the death of local service, and we'll put stations 500m or 800m apart if there's enough people there to use it. 1km spacing means every point on the corridor is within about 400m of a station, and the vast majority are much closer (because the vast majority of people and jobs and buildings are closer to intersections than they are to midblock nowheres). For people approaching a line from a perpendicular direction, like from 4 blocks north or south, going from 500m to 1km spacing has even less effect on them...Pythagoras always said "why walk 3 minutes south and 4 minutes west when you can walk 5 minutes at an angle?"
Having stations as close as 500m kind of destroys any advantage of being grade separated, as it comes at the expense of speed. The advantage of surface RT is that adding stations is cheap, as opposed to subways, where stations are about the most expensive consideration in construction. And when you get off the train, you're not at the front door of your shop or whatever, you still have to climb the stairs. Out of sight out of mind as they say.
Yeah, a minority of this minority will really prefer having a vehicle stop at their front door, but why must this tiny group hold the interests of the entire city hostage?
To say this "a minority of a minority" is assuming that the majority wants to live in a skyscraper at an intersection. If you take into account the entire city, most people want to raise their families in something more along the lines of a town house. These people have been under served by rapid transit who builds subways which are only effective to ultra high density, node style developments. And there's already plenty of that in Toronto to go around.
I know it sounds crazy, but try to remember that the city doesn't run on single yuppies alone.
So yes, back to the point, this is a huge market, and they're not to hold "the whole city hostage", only holding hostage the few who seem to think they have to zoom from Mississauga to Scarborough every day, and for them, there's no reason they should be using the Eglinton Crosstown anyways. They should be using something more the likes of a GO train. (Metrolinx proposes things called crosstown REX trains but it's not exactly clear what those are). That will always be the king of speed.
The Richview corridor makes that stretch very cheap to build, too..."cost effective."
edit - and it's not like the proposed LRT is dirt cheap...it's a multi-billion dollar project.
In my previous post I wasn't talking so much about construction as operating costs. Why are we paying someone to work the ticket booths in stations like Bessarion, or Ellesmere, or the future Richview station? Why are the escalators across the TTC always in disrepair? At some subway stations, I would hate to be a guy in a wheelchair only to see the sign: "sorry, elevator broken, please get back on the train and go back one station and then catch the bus back here". With surface LRT this is not a concern. Operating costs.