First of all, if the DRL replaces the 501, it can't be a pedestrian mall. We would need the now streetcar-free Queen to absorb cars from the other streetcar routes.
In my proposal, the 501 & 504 would have to exist with modified routes: 501 would run from Liberty Village east in a transit mall; 501 would run west of Bellwoods (Sunnyside would be a hub, picking up riders from Lakeshore/Queensway, as well as a new GO station).
But this way I think is a good compromise between the DRL routing options - since it's pretty much decided that RL east is coming across Queen, we can still get rapid transit to both Queen West and Liberty Village.