I don't think it makes sense. Shorter lines are easier to operate reliably, both lines go through an expanded Union Station streetcar loop so a hypothetical transfer is easy, and I don't think platform dwell time is a concern.
Waterfront West would come in via Bremner and the Air Canada Centre basement, while Queens Quay East would come in via a new portal at Queens Quay and Bay.
The alignment and portal location of the WELRT (or streetcar) can be changed though in order to line up better with the WWLRT.
I just figured that having a single thru-line on the entire waterfront would be desirable.
I thought Waterfront west would run down queens quay and go underground at the same point as waterfront east..
Nope. The WWLRT is supposed to use the median of Bremner out to Bathurst. If you look at Bremner through CityPlace, you can see that it's pretty wide, because it's been specifically designed for in-median LRT.