Living nearby, I am pretty (extremely) happy to see this mall being redeveloped, especially the huge parking lot/waste land around it - try walking across it on an extremely cold winter day or hot summer day, with cars not paying attention to you and an army of seagulls fighting over some Mcd's trash and your 10 bags of groceries... I hope this project will help the neighbourhood get rid of its not-so-justified suburban, post-industrial, Buffalo-like image because it is actually a really nice place to live. Also, the Galleria is essential to the community since it is our town centre, sort of. It has a grocery store, an LCBO, a pharmacy/post office, a Bank, a Dollarama, a pet store, a gym, a hair salon... So I hope this city centre spirit is kept when the site gets redeveloped.
Transit is often an issue when talking about this development, I agree, but if only the TTC were to restore full service on Dupont and Davenport: both take you to Dupont Station in 15 minutes during rush hour - with possible connections with the Bay/Christie/Bathurst/Ossington Buses, Spadina Station and even St George -, many commuters would probably use these routes over the crowded Dufferin bus to get to and from work. If you plan your trip properly, it only takes slightly over 30 minutes to get from Dupont and Dufferin to downtown. However, those buses are kinda useless now that they come every 20 minutes at best... It also is a 10 minutes walk to Dufferin Station, and there are bike lanes on both Davenport and Hallam that connect with Shaw and take you DT. It's a long shot but in a few years, the Eglinton Crosstown will have a stop at Dufferin, too.
Also, interesting to look at is this Toronto Staff Report from 2004 about a redevelopment proposal designed by Quadrangle Architects for this site. It mentions a mixed-used and phased development, 1,600 units in 6 buildings ranging from 6 to 19 storeys in height, townhouses, a few new streets, an extended Wallace-Emerson park, etc:
http://www.toronto.ca/legdocs/2004/agendas/committees/ts/ts040608/it004.pdf
Finally, it seems like the northeast corner of the intersection (knock off furniture store) was sold a few months ago and should be redeveloped with commercial spaces (apparently of Tim Hortons and a Burger King). I also read somewhere on Twitter that The Brick, just north of the rail tracks, was sold (which could explain why everything has been on sale for months).
I'll try to post some pictures of the Galleria land this week, and also of the renovations they did these past few months (new entrance on the south side).