While Eglinton will not be fully-grade separated the entire length, even the non-tunneled portion still will be grade-separated to a degree. Provided transit signal priority is properly implemented, the surface line will run significantly more efficiently than other non-subway options.
And cost is an issue since there would be a sizable difference to either bury or elevate the line currently planned to run on the surface. An LRT would not NEED to be completely separated whereas a subway would (which is both good and bad).