F-line, I've got to disagree with your assessment.
The traffic in the square and getting across the bridge is terrible most of the day. It's really excruciating, just take a look at how many people get off at the first stop after the bridge and walk to the red line instead of staying on the bus a stop or two more when it drops them of in the busway / right next to the entrance. At best, a trolley would fair as well as a bus. In practice, it would probably do worse just because of massive congestion.
Then add to that the umpteen days a year the square is closed to all traffic and the buses have to reroute up Mem Drive. Are you going to lay a separate set of tracks for these occasions? Bustitute from Barry's to Harvard? Neither is a particularly palatable solution to what will likely be a massively used route once implemented.
Another major issue that needs to be addressed with street running is that in-street tracks are really, really dangerous for cyclists (and drivers when it's wet, looking at uHub). Harvard has so many cyclists going through it that I frequently have to walk a few blocks just to find a place to lock up. Unlike many of the places where street running is not an issue, Harvard has mostly two lane streets, and cyclists need to be constantly moving out of the bike lane and into general traffic to make turns. Cars also tailgate. It would probably only take weeks for the first cyclist to get caught in the tracks, hit the ground, and get run over. Yes, there are rubber inserts that can mitigate this to an extent, but they don't do well in winter, and there is the Ts questionable maintenance practices. And the rubber inserts do nothing to keep cars from sliding everywhere.
This isn't like adding tracks to Centre Street, which is a fairly linear corridor. This is a complex network of crisscrossing streets that would do terribly trying to accommodate 140'+ of train. I imagine that's why they built what's now the busway in the first place.
As for the substation in the tunnel, have the terminal be before it. Just because the tunnel extends straight to the wall of the lobby doesn't mean that the trains have to go all the way there. Have them end wherever there is room for 2 or 3 tracks plus a platform, and build a passage for people to walk to the lobby. Non-issue. All you loose is the cool factor of trolleys pulling straight up to the Dunkin Donuts.
My point being, if you're not going to build a new river crossing tied into the abandoned RL yard leads, then the project is straight up not worth doing. Either have the "new A" terminate at Harvard Stadium (a'la Watertown Yard vs Watertown Square), or go full blast. It's expensive, but it's not worth it otherwise.
Now what I don't think is necessary is grade separation between the Pike and the Charles. There are only going to be three crossings of any significance (Cambridge St, Western Ave and N. Harvard St), and all of those would likely have stations. A large problem on those streets right now that is only going to get worse as development in the area ramps up and adds more pedestrians and *stuff* is that there are limited traffic control devices on these streets, so traffic flies along at 40MPH+. A signal, particularly on Western and N.Harvard will help by slowing things down and giving peds a chance to cross.
A reservation with offset platforms and signal priority would plenty suffice. Granted, nixing three underpasses doesn't come close to making up the costs that a new, underground river crossing would be, but it's a start. The other bonus with running at-grade through Allston is you have the potential to use the Barry's Corner stop as a busway combined with rail for better transfers, as I've shown below. One of the stupid things about Barry's Corner right now is that bus transfers are a pain, you have to run across the street. A a decent amount of people switch from the 66/86 to the 70 and back.