Lots of great ideas here. I'd like to see the legacy network expanded, even in mixed traffic. There are some really obvious gaps that could easily be filled. I was on Parliament Street a few weeks ago and saw that there were laying down fresh tracks and couldn't help but wonder why on earth they wouldn't spend a bit more to extend the existing tracks that short distance up to Castle Frank station. You'd instantly have a whole new line for little effort and cost. You could also take it south of King to the Distillery, and once the East Bayfront is developed, down to Queens Quay. Another obvious one would be Coxwell, which already has un-connected tracks in places.
Some others: Victoria Park south to Queen, Sherbourne from Bloor to Lakeshore, Church from Bloor to Front, Bay from Bloor to Lakeshore (and maybe north of Bloor along Davenport), Ossington from Bloor to Adelaide (perhaps north to St. Clair via Oakwood as well), Dufferin from Bloor to Lakeshore, Dundas from Bloor north through the Junction and all the way to Kipling station in the west), Front from Parliament to Dufferin, Adelaide and/or Richmond for their entire lengths, and Gerrard from Parliament to University.
Note that these are all in mixed traffic, not ROW's, since the streets I mentioned are too narrow, and tunneling would be too costly. There are many more streets where I would put them in their own ROW.