30,000+ people per day is not shabby for an LRT. Remember that Hamilton's peak behavior is somewhat different from a lot of cities. The McMaster students and the shiftwork at many Hamilton industries, really spreads peak surges here in Hamilton. We don't get as contrastingly sharp peak periods like Toronto does. Sometimes midday is almost as busy as peak!
Although the capital costs are stupendous (especially with Ontario debt), moving 30,000 people per day by LRT is operationally cheaper than moving 30,000 people per day by BRT. There are pros and cons of LRT and BRT, but for Hamilton, the LRT makes a lot of sense from a citybuilding uplift perspective, given the depressed state of lots of Lower City, combined with really good LRT-justifying traffic on the B-Line that would go up even more.
It is wholly possible that the projection of 30,000 per day is a gross underestimate, as many LRTs have exceeded the most optimistic estimates. But maybe not. Still, 30,000 people per day on one route is quite not shabby. Bus connectors will probably help amplify this, reducing the number of kilometers buses need to transport passengers at higher cost, and transporting people at lower LRT cost. (In 2001, Calgary C-Train cost only $0.27 per passenger to operate, versus $1.50 per bus passenger -- and that is including 2001 electric versus diesel prices; today the differential is bigger). Today, Hamilton's HSR average operating cost is about $5 per bus passenger. Done well, the LRT could slash operating cost per passenger quite a bit. The capital cost is the painful part, though.
Also, I need to point out that $1bn includes two LRT lines (A-line stub), so it's likely a $750bn allocation to the B-Line
But that said... about the need for BRTs... You are right, we also need BRTs, or at least more good fast frequent buses, too. Hopefully a bus expansion announcement is coming too.