I can see how they might implement the written rules by giving each stop and calculating the number of cardinal directions the user moved through for their trip (you get freedom of movement in 3 directions, the moment you use the 4th or double-back it's a new fare).
It's not difficult to find a valid routing using the TTC Trip Planner where you do use 4 directions -
http://www.ttc.ca/Trip_planner/index.jsp
For example, a 4:31 afternoon trip from Broadview and Wolfrey to Roncesvalles and Grenadier. TTC says take 504 north to Broadview, BD line west to Dundas West, and then 504 south to Grenadier. At only 38 minutes, surely much faster than taking 504 all the way through the city in rush hour!
Another example is from Gerrard and Norwood to Dundas and Howard Park at 5 pm. You end up moving east twice - in this example on a 506 and then a 505, but late at night, it could be on two 506s.
Now, with only having to tap on at the first stop, this wouldn't get caught. But surely there's other examples.
Good grief, and what happens when you tap on eastbound on 506, and the next tap is northbound 51 at York Mills. I've done that to get to Leslie/Lesmill from Gerrard/Woodbine. 506, BD, Yonge Subway, 122 Graydon (or York Mills), and then a 51. I was going to take the 122 up to Lesmill/Duncan Mills and walk ... but at Leslie I realized there was a 51 coming at a transfer point.
It's going to be a nightmare if they don't adopt time-based transfer. But getting Metrolinx to pay for it as a penalty would be the cheapest way to do it.
If you are going to start fiddling with the rules (or rather how they are implemented) why not just bite the bullet and go for time. It's clear and arguments about a valid/invalid transfer will almost end - it's far harder to argue about the time. The cost of programming the current rules would be huge.
The cost doesn't matter. Metrolinx is paying for that. 2-hour transfers will cost $20 million. If Metrolinx can't pull it off, then Metrolinx pays $20 million - for a long time. If you assume 40 years of annual payments of $20 million at a discount rate of 5%, that's a $340 million penalty payment from Metrolinx.