The storage isn' a huge problem; the existing tracks do connect to suburban areas where land parcels for additional car barns can be found.
The difficulty to convince the public, on the other hand .. can that be a sign that the actual riders don't see much value in converting mixed-traffic bus routes to mixed-traffic streetcar routes? The travel times will be same, or maybe slightly worse because it is harder for a streetcar to get around obstacles. The headways might increase if the route does not have very solid ridership already; higher capacity per vehicle = fewer vehicles per hour. The streetcar ride is more smooth, but does it matter that much for the majority of riders?
As I remember, the research on the riders' preferences, bus vs streetcars, produce results that vary from one city to another. While Toronto downtowners appear to prefer streetcars, perhaps for nostalgic reasons in part, that kind of preference isn't universal.
There may be benefits in adding some strategic bits to the mixed-traffic streetcar network, such as extending the 505 north along Dundas (that could relief the Dundas West streetcar loop and allow for more frequent 504 service), or extending 505 further east using Gerrard and then to Coxwell Stn (more service on the route that already has 506 streetcars, plus more room at the Broadview loop for added 504 cars). There is even greater benefit in extending the 512 west to Scarlett, if that line can remain entirely in dedicated lanes. However, trying to convert every bus route to streetcar just because there is a way to fit the streetcar on the street, may not be the path to actual transit improvement.