Definitely think both sides in this argument are valid, and both have their pros and cons. Grade-separating the entire route provides higher speeds, higher capacity, more reliability; but costs significantly more and offers less local service. Tram-style offers more local service and costs considerably less; but has slower speeds, less reliability, and lower capacity. As for development, both have their benefits (one being higher-density but more nodal around stations, the other being more low/midrise stretched along the arterial)...both great, with the latter being a bit more realistic IMO.
This is why I think an Eglinton Crosstown-style premetro/stadtbahn solution can work in this instance. We get tram-style in the outer ends, but grade-separate the central portion. I also think over the decades we should do the same with our legacy streetcar system (501, 504, 505, 506), and attempt the same for waterfront transit. Nothing as exorbitantly costly like the Crosstown (with a whopping 10km of deep bore tunnel
, and some very costly stations
that no doubt will remain underused for centuries). Rather a few km of tunnel, cut/cover, or trenched.
Already posted this map in this thread, but since BurlOak brought up the Hydro Corridor I thought it'd be fitting to post again. I think it's a fantasy map that's worth pursuing. We get the best of both types of transit, grade-separation can be done affordably, and we fix the Sheppard Stub once and for all (by converting it for LRVs). The only change to the SELRT and FWLRT would be to use high-floor LRVs (and stops) in place of the low-floor Flexity Freedom.