The LRT is the best option, no doubt. Providing silver-plated service to many rather than gold-plated service to a few. The accusations of "transfer city" are ironic as the subway does not reduce transfers except for a very selected, relatively unimportant travel pattern carrying no more than about 800 pphpd, and 200 offpeak.
The Sheppard subway proposals simply don't reach far enough to be truly beneficial, a line that runs from Dufferin to Kennedy is not that useful and less beneficial if you're more than a km east or west of the proposed termini.
A true northern crosstown route, particularly if coupled with the Scarborough-Malvern LRT, SLRT, and maybe a direct spur to STC, and a north-south connector in the west end (not necesssarily Jane, but possibly Islington or Kipling) provides a true network backbone serving much of the city.