Here's an interesting what-if scenario: what if back when they were planning the Spadina Expressway, civic opposition was not enough to make Bill Davis to withdraw support for the project, and Metro did proceed with a giant canyon by wiping out the Annex and Chinatown?
It would have been a disaster. The 4-lane trench would be perennially jammed and would have been a bigger death trap than its other bathtub cousin, the Decarie. The neighbourhoods would be gone, just like how the area between Westmount and NDG around the Decarie is sort of a gray zone despite being sandwiched by two rather upscale neighbourhoods. Because the affected neighbourhoods would have included Cedarvale, the Annex, Kensington Market and the Warehouse/Entertainment district, it would have wiped out a very good chunk of Toronto's desirable urban stock. Downtown would have essentially been 'walled off' on three sides: by the Gardiner, the DVP and by the Spadina Expwy.
Would the downtown core become a ghetto?
No, probably more like Chicago or Boston. The downtown residential component was already established in very dense high-rise neighbourhoods.
How far would sprawl go to right now?
Probably no further than it does already.
How would the city's reputation for neighbourhood liveliness fade?
We would have lamented how we amputated our most desirable neighbourhoods, but the city's urban neighbourhoods extend for miles and Torontonians are still agoraphiles at heart. We would be like Bostonians who still have a good chunk of their urban form and delight in its urbanity, but completely trashed their West End and split their downtown in two.
Would we become like Atlanta or Detroit?
Neither. We don't have the racial politics/factory town decline of Detroit and Atlanta is not a city so much as a collection of exurban edge cities congregating around an airport and a business park downtown. A comparison to Chicago or Boston post-Central Artery is more apt.
What if, a week later, the TTC decided to proceed with its plan to completely do away with streetcars?
I don't particularly like streetcars as a method of transport so I'm going to say that apart from a loss of history, we would not have suffered overall. Certainly if a Queen subway would have been built, the appeal of transit would have gone up, rather than down. On the other hand, had we abandoned the streetcars, built the Queen subway but not built the Spadina freeway we would be - get this - better off than we are today. Every downtown neighbourhood would be within 1 km (15 minute walk) of a subway line.