Call me unimaginative, but I like Kenmore as a terminus for the Blue Line.
It would provide a necessary, higher-capacity, east-west route through the densest (job + tourist + resident + etc) section of Boston (Fenway - Back Bay - Beacon Hill - Downtown). It would also be well-fed via transfer by feeder routes from the west (57, B, C, D), and improvement to these routes would be more cost efficient than duplication or replacement with the Blue Line.
If I was to be imaginative/crazy and send the Blue Line west of Kenmore, I'm partial to sending it under Beacon Street, terminating at Cleveland Circle. It's straight, it's dense, and the stop-spacing writes itself: (Audubon Circle/St Mary's St, Coolidge Corner, Washington Square, Cleveland Circle). The C-branch reservation on Beacon Street would be a perfect multi-use path. The removal of the C-branch would enable further branching of the Green Line (A-branch to Watertown or F-branch to Dudley). Whatever your favorite option is, the capacity freed up would allow it to happen.
I don't like the idea of sending it to Harvard Square, because the more circuitous nature of that route (compared to Beacon Street), and the presence of the Red Line, diminishes the net gain of sending the Blue Line there.
I don't like the idea of Blue eats D because that ROW is already far faster than the C (so the net improvement is again diminished), and Newton does not have rapid transit density throughout. The density would support rapid transit to Reservoir, sure, but places like Waban or Eliot don't have the ridership or density to justify rapid transit. That leaves the following options for that ROW in Newton: convert rapid transit anyways, keeping all of the stations, which is a waste. Run the Blue Line to Riverside, but remove some of the existing Green Line stops, which is a transit loss for many people, and also, again, a waste of a high capacity line. Terminate the Blue Line at Reservoir, and run the D over the C ROW along Beacon. This would also be a net transit loss for riders in Newton, who would now have a transfer or longer ride to destinations in Brookline, Fenway, Back Bay, and points east.