I agree with a lot of this sentiment. But the way the system has evolved, realistically, the subway has become a regional infrastructure instead of an inter-nerighbourhood link. It acts almost like a GO train, except with a flat fare structure. I seriously believe that a lot of the political issues surrounding where subways get built is because of this flat pricing model. $2.50 takes you from Eglinton West to Union, or Vaughn Centre to Union (when it opens). That's probably an extra 30km of bad congestion right there. So it offers better value to those that want to use the system as a commuter line and poor value to those that really want to use it as an inter-neighbourhood transport. That's a ton of extra value capture for living near a "far out" subway station.
Also the demand on the Yonge line is the demand at the current price. Obviously we wouldn't need a DRL if TTC fares were $15.00 instead of $2.50. Now I'm sure social justice advocates are going to want to jump on me, but if we really wanted to keep the subway as an inter-neighbourhood transport, a pay by distance strategy would be needed. Something like you enter a subway station (don't matter if it was by foot, ttc bus transfer, go train, etc), pay an entrance fee, like $1.00 which gets you something like 5 stations of travel in any direction, and then any station travelled above that would be subject to a higher rate. Sort of like a zone system, except without stupid arbitrary boundaries.
I wonder how such a system would change the current dynamics of where people want subways vs GO, and how the demand would be affected.