Would it make sense to terminate them at 407 station?
This is a really interesting question. If you're heading nearly anywhere on the TTC, you're actually better off changing to Line 1 at 407 than Yorkdale. Furthermore, nearly all of the GO bus connections at Yorkdale have equivalents departing from 407 station:
Yorkdale GO bus connection: (Alternative from Hwy 407)
- 19/94 to Square One (Routes 40/41/45/47/56)
- 19 to Renforth Transitway, Dixie Transitway (Route 40)
- 27 to Meadowvale (Route 48)
- 27 to Milton,
peak only (Route 48 -> Route 21/Milton Train)
- 33 to Shoppers World (Routes 41/47/48/56 -> BT 11/511)
- 33/36 to Brampton (Routes 41/47/48/56 -> Kitchener Train)
- 33 to Mount Pleasant, [...] Guelph (Routes 41/47/48/56 -> Kitchener Train)
- 33 to University of Guelph (Route 48)
- 34 to Pearson (Route 40)
- 36 to Bramalea Stn (Routes 41/47/48/56)
- 36 to Bramalea Term (Routes 41/47/48/56 -> BT 13/15/115/Route 36)
- 92/94 to Scarborough Centre (Route 41)
- 92 to Kingston Rd through Durham (Route 41 -> DRT Pulse/Route 92)
- 92 to Oshawa (Routes 52/56)
- 94 to Pickering (Route 41)
- 19/27/34 to Sheppard-Yonge, [...] Finch (TTC Line 1 -> TTC 36/936 or 84/984)
- 33/36/92 to York Mills (TTC Line 1 -> TTC 94)
The only destinations where Yorkdale is significantly more convenient are Kingston, Napanee, Belleville, Trenton, Port Hope, thanks to the once-daily Megabus service from Yorkdale (the rest of Megabus services depart from Union). So there is a decent case for cutting service back to 407.
But rather than cutting ONTC back, my thought is that the GTA terminus for Ontario Northland should be changed to Pearson Airport. That would open up a major new market for ONTC, since passengers with luggage are disproportionately dissuaded by transfers. ONTC currently runs 7 daily round trips from Barrie to Yorkdale, they could just as easily be running 7 daily roundtrips from Barrie to Pearson. GO currently doesn't serve the Barrie-Pearson market very well, due to the lack of connection between the Barrie Train and the 407 buses.
But before creating a transfer for most of their existing customers, ONTC need to work on their integration with the TTC and GO Transit. You should be able to book a combined ONTC+GO ticket on the ONTC website, and there should be some discount compared to buying the tickets separately (or at least the Presto discount). Combined ticketing with the TTC is a bit harder due to the Presto fare gates, but they could at least provide estimated trip plans via Line 1 to Yorkdale and Union via their website rather than just saying "sorry that trip is not possible" like they currently do for the trips which terminate at Yorkdale.