Vaughan and Markham (aka York Region, NOT Peel region, and all the important parts of Steeles only border Toronto and York Region) are already going to raise densities as part of the Yonge Subway expansion plans. If the Yonge Expansion gets built, and even if it doesn't, fully expect that the already fully developed York Region Yonge Corridor to add another 100,000 people in the next 25 years via intensification.
Meanwhile as part of the Yonge Street intensification plans, Vaughan is actually intending to intensify Steeles from Yonge all the way to the newest condos near Bathurst. There's a lot of car dealerships and strip malls there, that could easily be bulldozed to make some very good mid-rise mixed use development 2 blocks deep which is exactly what Vaughan is intending:
http://www.city.vaughan.on.ca/newscentre/projects/yonge_street_study.cfm
Furthermore, along the York University corridor, there's plenty of absolutely nothing inbetween Steeles and the power lines that could easily become office parks or research-related (related to York U) buildings as well as further expansion by York University northwards. Then there's also the possibility of the City of Toronto completely developing the 1km of strip malls that runs on the south side of Steeles just west of Dufferin. Meanwhile the corner of Dufferin and Steeles is slowly filling in with condos.
Finally, west of Jane until Weston there's a lot of strip malls that could easily intensify if need be in the future.
On the Markham side of things, unfortunately due to the makeup of the street, I doubt Steeles from Yonge to Don Mills will actually change. It would be far too difficult to change that area due to the great number of individual houses and small properties that would have to be bought up/expropriated while there are so many better places to build.
Still, there were plans not too long ago (probably abandoned now due to financial crisis but who knows) to transform the Shoppes and Steeles & 404 (the mall) into a mixed use 'urban mall' development much like the newly revamped Don Mills Mall. If Don Mills Transit city becomes a reality, this could easily happen in the future.
East of the 404, there is far more opportunity for intensification and change. There are large plots of empty land from the 404 all the way until Warden scattered on both the north and south side of Steeles. The rest is occupied by massive office buildings (for IBM, BMO, etc) and some strip malls/Chinese malls which could be intensified later on.
The strip from Warden to Kennedy would likely remain the way it is for a long time due to the single detached house nature of the area. Meanwhile east of Kennedy from Pacific Mall until Midland there's a lot of opportunity for future intensification, especially as developments up Midland go all the way to Steeles, new developments from Downtown Markham and south on Kennedy to Steeles extend to Steeles, and if that GO station there is fully utilized. Further than that I doubt much more could happen.
A potential Steeles RT would link up many future transit links, forming an even better network. Already Steeles 60 and Steeles 53 buses are some of the busiest buses in all of Toronto. While not as busy as Finch, with the aformentioned possibilities of intensification, I could see it going pretty far.
A Steeles RT would connect with:
Spadina Line at Steeles West Station (at York U)
Yonge Line extension Steeles Station (Yonge and Steeles)
Don Mills Transit City Steeles Station (Don Mills and Steeles)
Furthermore, if TC ever gets fully built, with Downtown Markham being a reality, I could see a Kennedy TC line being a reality, to connect Downtown Markham with STC running by Pacific Mall and of course connecting to Steeles.
Steeles isn't ready yet for an RT line just yet. As well, the section where the 5km from Don Mills to Yonge on Steeles which will likely never change much in the foreseeable future would be a total bypass route, which would cost a lot of money. Meanwhile, if that section wasn't built, then the full network benefits would not be realized as there wouldn't be a good way for customers taking the already extremely busy Steeles 53/53E to not face the wrath of many transfers, nor would it help in the many people who would see the employment centres by Steeles and 404 and Pacific Mall as a destination to use transit due to the number of potential transfers.
Perhaps if this part were not ROW, but instead standard streetcar tracks, then it would be more compatible (as there is limited room for expansion of Steeles inbetween Yonge and Bayview) I also wonder about the ability of RT to go on that massive hill up Steeles from Bayview to Yonge safely, but I'm not an LRT expert.