Keithz... I take the 85 sheppard bus everyday during rush hours, and off-peak from Meadowvale to Don Mills and back. It's incorrect for you to say the whole of Sheppard East is not congested, simply because traffic east of Markham Rd isn't. Thats pretty much self explanatory once you consider Rouge Park and Malvern with its relatively high proportion of green space begin to eliminate much of the useable land once you pass Markham Rd. Also there is still a ton of undeveloped land between Sheppard Ave and the 401 between Morningside and Meadowvale.
I probably got the most experience travelling the Sheppard corridor than anybody else on this forum. I've been taking the 85/Sheppard Subway/196B route to York for the past 5 years. I average about 25-35 trips per week along Sheppard of various distances, mostly the entire route (Meadowvale to Don Mills) and at all times throughout the day.
I can tell you that in the winter (normal conditions) traffic westbound is stop and go at Meadowvale from about 730/745am - 845am.
During the school year every westbound bus between 715am - 830am is at capacity either just before or after Neilson Rd. If the bus is coming from Rouge Hill, it is completely filled by Morningside. I board at Dean Park and there are easily lines of 15+ people building up every few minutes at peak times. The stops between Meadowvale and Conlins Rd average close to 10 people per stop, and this is with frequent service. It may look like a low density area from Google Maps but that doesn't tell you anything about the people living there... 97% visible minorities and tons of youth... minorities who can afford new houses in the 416 are definetly working people (a lot of them are going downtown) and certainly don't shy from transit (if you take the bus regularly in northeast Scarborough, you will understand that passengers are atleast 90% visible minority). There is no high school in walking distance east of Morningside Ave, you got kids trying to get to about 5 high schools and young people going Seneca@Don Mills, Centennial, and YorkU.
The buses leave people at the stops. There is no relief until McCowan, when a good 30-40% of the passengers get off. If you live between Markham Rd and McCowan, you are watching multiple buses leave you at the your stop. Congestion is very real along the majority of Sheppard Ave during the morning rush and renders travel times by transit extremely unreasonable for such a major corridor.
The transit plan that makes the most sense for Sheppard is extend the subway along Sheppard to Agincourt GO and then south to STC. LRT or some form of upgraded bus system (express buses, brt lanes, signal priority) would be good enough for the remainder of Sheppard.
Still... I respect Miller and I am satisfied with the Sheppard LRT as currently planned because at the bare minimum, transit will no longer be enslaved by road congestion during peak hours. I recognize the need for faster trips along some kind of northern 416 east-west corridor, but I feel the majority of long distance trips in the future will still be downtown oriented. Sheppard corridor trips will be well served by the LRT, although it could have been done cheaper with true BRT.