If we were going to convert the Sheppard Line to a Light Metro like the OL I would do it in 3 steps (or phases if you will)
PHASE 1: Construction of the western extension to Sheppard West
This would have to be built first since a converted Sheppard Line would need a place to store and maintain its trains and Downsview Aiport is the only place with land suitable for this. This phase would take a couple of years and would see the construction of stations at Senlac, Bathurst, Faywood, and Sheppard West as well as a storage and maintenance facility on the Downsview Airport lands somewhere (probably part of the Wilson Complex). During this phase there would be no impact to current Sheppard Subway service with the exception of converting the westbound platform at Sheppard-Yonge (the one that is rarely used) to the new track gauge and catenary, this is important for later. As well this extension and conversion would obviously need to be built to the current Sheppard Line tunnel diameter since we can't re-dig those tunnels.
PHASE 2: Conversion of the current Sheppard Line to the new standard
In this phase the current Sheppard Line between Sheppard-Yonge and Don Mills would be shut down for at most 6 to 8 months since work here would simply be re-gauging the tracks to standard guage and installing overhead catenary (the new signalling system could hold things up) but given how short the Sheppard Line is and the fact the line would be closed any impacts on timelines should be negligible (however this is Toronto after all). The exception to this shut down would be the one platform converted at Sheppard-Yonge station back in Phase 1. This is done to allow trains to begin operating between Sheppard West and Sheppard Station; its not much but it would show the public that progress is being made and that this whole idea isn't complete lunacy. Obviously shuttle buses would replace Sheppard Subway service for the months the conversion takes
PHASE 3: Extension East to Scarborough Town Centre (If applicable)
In this phase the conversion work would be done and trains would begin operating fully between Sheppard West and Don Mills station. If the OL has already made it to Don Mills then a connection between the two line should have been built during the phase 2 conversion. If the OL hasn't made it yet or the OL isn't planned to go to Don Mills (or worse we've compleltly bungled it and built the OL Station elevated) then the connection track will be built duing this phase (or not at all in the elevated case). The only thing left to do would be to extend the line east to the Scarborough Town Centre at this point.
It can be done however it would need a concerted effort and an understanding that once work begins on Phase 1 there is no going back. You could just do Phase 1 and 2 and then call it a day and have the line run between Sheppard West and Don Mills and since the west extension would be built to the pre-existing standard on the Sheppard Line if at somepoint we decide this OL tech isn't working for us, well running the extension with TR's would also be possible. At that point however we've just extended the subway west like it was originally planned with no difference at all. Once we start laying track and stringing wire on the western extension that is the point of no return and we are committed to converting the Sheppard Line to the new trains. Any decision to use TR's on the western extension to Sheppard West and continual use on the current line has to be made before then.