I actually think this is going to be good for Toronto. It might not be in the immediate term, but in the long term I can this only being a benefit in the end.
Why? Build out to Vaughan. You bring more commuters into the city from the outlying suburbs which is only good for Toronto. More workers, more visitors, more people without cars. It also makes use of a line, which from what I seem to understand, has the capacity available to handle more riders (unlike Yonge). Add the replacement of Scarborough RT with a subway (and maybe an extension while they are at it). And for the trifecta (looking a little further ahead) finally completing the stumpway called Shephard all the way to SCC. It could be entirely realistic to see all these projects done or near completion by 2015.
I would see these projects as being really smart choices for Toronto (and some suburbs that immediately neighbor it). Toronto is the suburbs as well as its downtown area and increasingly so, Toronto is bleeding into the 905. Viewing the city as such, these outer areas are the ones that really need to see improved transit connections, and will probably benefit the most from them. And, once those 3 projects were complete, the demand for a DRL or looking towards other lines such as Eglinton would probably be very likely.
I know some might disagree with this opinion but I would also remind people that this is just one budget and come election time Toronto and the GTA are likely to see more investment and a few more projects. And in reality, any transit projects are good projects at this point in time. The TTC might be a respectable by North American standards, but weak internationally. Its going to take many decades before Toronto (and other Canadian cities) will be able to actually claim to be transit accessable regions so for the time being I tend to view transit projects in terms of 'whatever, wherever'. Take what you can get, and move on to the next battle.
Edit: And for those worried that Toronto is going to end up paying for the 905 with this extension, I would assume that by the time this extension is completed, the GTTA, or similair agency would be in place. I would also assume that with such an agency issues such as assigning maintanence costs and distributing fares (in the case of intermunicipal trips) would be adressed and be dealt with fairly. The 416 and 905 regions are more and more going to be intermingling with each other in terms of transit so get used to the idea of the TTC making a few more trips outside of its usual neighborhood.
