A London Overground type system on the rail corridors would be great, and leave the GO Trains for express services to the 905.
Express service to the 905, as well as express service for select nodes in the 416. Stations within the 416 should really only be located at the intersection with local rapid transit lines. That's the way to build a good density node, to have an express line, one or two local rapid transit lines, and a bunch of bus routes (maybe some of them even being BRT routes), all meet at the same spot.
This is why I see the area around Danforth & Main becoming huge, ditto for Dundas West and Bloor. The biggest hub in the west end of Toronto I think will be Kipling. Express rail for both the Milton and Midtown lines, B-D subway, Dundas LRT/BRT, and maybe some type of 427 express service. Couple that with a large area of industrial land to the south (the City would have to change its stance on employment lands though), and you have the makings of a pretty major hub. Not to mention the 427 and Gardiner/QEW nearby.