Both Southgate and Kingsway were a sad result of the management/ownership not wanting a direct connection with the mall for "safety" reasons. But to your point about cost-effectiveness, Reece, from RMTransit says one thing that I agree: having the underground section downtown and at the U of A might have cost us a few km in terms of extension, but will facilitate growth in the long term, considering that with the right technology, headways could be as short as 90 seconds (which would allow for, say, 4 lines crossing the tunnels every with 6 minutes headways for each, for example) and it allow makes densification easier, because of that.
Now, back to Blatchford, as much as NAIT needs housing, I don't know how fast they'll be able to build it in order to push the city into improving access to the station.