I've thought about this a bit more, and if the (Greater) TTC is grown to include the entire subway network, then there would be no need to upgrade Rapid Transit, LRT, and BRT to the Metrolinx level as in most instances, there would be no rapid transit crossing an agency's boundary. So the TTC, Metro Hamilton Transit, Grand River Transit, ect. would operate as their own islands of service.
This way Metrolinx would only take over GO Transit as the Regional Rail/Intercity Bus Authority and Highways in the Greater Golden Horseshoe as well as acting as the Upper-Tier planning body for the GGH. They could even take over maintenance of the Gardiner and DVP from the City of Toronto if they wanted to.
I also really like the idea of creating divisions within the TTC as well for local route planning purposes, although I would tweak the boundaries a bit. Creating these divisions within a larger TTC would also ease the transition of the local transit agencies to become integrated wholly within the TTC. Each division would also maintain their own office in their respective municipalities for local route planning and transportation objectives.
A map of how I'd tweak the transit agency service areas can be found here.
We're definitely thinking along the same lines, but I think the main difference in our views right now is the issue of control. With the expanded TTC covering so many municipalities, the question then becomes who pays for it, and in what percentage? If Vaughan has to make funding cuts to the TTC, do those cuts exclusively affect local routes in Vaughan? Or do the other municipalities have to boost funding in order to maintain the status quo?
This could lead to a lot of infighting with respect to what each municipality thinks an 'appropriate service level' is, and how much to fund it. This could be solved in 2 ways:
1) Give Metrolinx it's own revenue generating power (sales tax, tolls, etc). This way it's financing is still being drawn from the constituent municipalities, but not from the municipal governments themselves. I would think that even an expanded TTC would have a hard time doing this, because it wouldn't be applied across the entire region, just where the TTC operates. This is why I think having the TTC operate under the umbrella of Metrolinx makes sense. You can maybe keep the TTC branding, but the TTC as a corporation would be funded by and be a subsidiary of Metrolinx (much in the way GO operates today).
2) Create Metro and give the municipalities a voice via Metro, which would control Metrolinx. This setup would just be a larger scale application of how the TTC was funded during the days of Metro Toronto.
To summarize, I think that one of these three options is preferable:
1) Have Metrolinx remain a Provincial agency, and merge (similar to the map that you proposed) and then upload the various transit agencies to become subsidiaries of Metrolinx (again, much like GO is today). Take the funding responsibility away from the municipalities, and let Metrolinx raise it's own revenue across the GTHA. This would free up property tax revenue at the municipal level to either be used on other things, or to be given away in the form of tax reductions.
2) Same as above, only Metrolinx no longer be owned by the Province, instead by the constituent municipalities. This has the potential to make Metrolinx lack a clear direction though, because there is no single political will guiding it.
3) The Metro Toronto model with Metrolinx being the new TTC, in charge of everything.
The former would affect just transit and transportation, and leave current government structures in place. The latter would completely transform the political landscape of the GTA, and affect pretty much everything. Just a question of how bold you want to be, and what problems you want to solve.
It was my thought that Metrolinx would be a corporation owned by the member Regional Municipalities and that any infrastructure funding given by the Provincial or Federal governments to the member municipalities would receive review by Metrolinx. Metrolinx could also act as a lobbying body to the federal government on behalf of the GGH as well as providing the framework to generate it's own revenue through tolls, development charges, or a regional sales tax.
I would hope that Metrolinx would be able to coordinate infrastructure development in a similar way to the National Capital Commission does so in Ottawa, except with a more laissez-faire manner concerning local matters, and the 20/20 hindsight to not make the kind of planning mistakes that the NCC has made in Ottawa.
The NCC model is an interesting one to use. If Metrolinx were to be kept at the Provincial level, it would in fact be pretty similar to the NCC. Having it owned by the municipalities though may complicate things a bit, although it is definitely an idea worthy of further consideration.
Although if that was the case, I would think that the name Metrolinx should only apply to the transportation arm of the corporation, with the larger entity being called something more general, like the Greater Toronto Planning Commission, or something like that.
EDIT: I did a short org chart of what I'm talking about.