I love the density too, but I just can't see how this works. What they've done here is basically propose building a full CambridgePark Drive that has no access to Route 128 and Route 9 other than Needham St, already the most congested road in Newton. This site has no transit access and no prospect for transit access, it's served only by 2-lane roads and Needham St. is being dieted to some extent as part of the redux (although I think they're upping to 4 lanes on the bridge). This isn't Riverside with its Green Line and near-direct access to 2 interstates - where are all these cars going to go?
I agree that it's a hell of a challenge, but think you're exaggerating somewhat.
1) I haven't seen a breakdown of what percentage of shoppers / worker in this district are Newton / Needham locals versus from farther afield. But us locals know that there are other ways in and out: Oak Street and Christina do take some of the burden off Needham Street. With improvements at various periphery intersections and to Needham, there could be some alleviations.
2) Improved pedestrian access probably will knock off some of the driving, I know plenty of people who express constant amazement and frustration at what a pain in the ass it is to get there by foot compared with what it could be. I don't think this is a big factor, in fact I think they're over-selling it, but it's not a non-factor.
3) It's not as transit unaccessed as you're making it sound, though it is seriously challenged. The walking distance to Newton Highlands is not that bad and the distance to Eliot wouldn't be that bad with better punch-throughs for pedestrians, like they;re planning. The problem is that the walk just absolutely sucks. But I know there are residents from Avalon who do it every day and I know there are retail employees in those Needham Street shops who do it every day. If that entire corridor's sidewalk streets cape were improved, the percentage of residents and workers who walked to the green line would increase.
4) this area already screams out for some small hyper-local bus loop, and the proposed Northland development will only add to the critical mass. One could be the short loop: from Highlands: Walnut, Centre/Winchester, Needham, Oak, Elliot, Woodward, Lincoln, back to Highlands. Banging right turns all the way, and serves the Upper Falls neighborhood. Another longer loop could run express down Needham across the bridge to serve the Needham side (I think there may be some private shuttle doing this one already, I'm not sure). Eliot station is so awkwardly located, I don't know how you feed that with bus routes.
5) I know these big developers prefer national chains with regional draw a la Marshalls etc, but many of those aren't doing so well anyways, and their proposed development doesn't look to me created with that in mind. If they do create a decent improvement to the retail streetscape, and include a good mix of small-scale locally oriented cafes and restaurants, a decent percentage of the clientele will come from those 900 new households living there, plus the several hundred a short walk away at Avalon, plus the thousands more a moderately short walk away in Upper Falls. Upper Falls is an incredibly cozy and walkable neighborhood, and the people I know who live there do in fact walk - it isn't just walkable, it gets walked. They're all frustrated by the relative dearth of a local village center (very odd scattering of retail up there) and also by what a pain it is to get into the Needham Street retail area without being in a car, and how it sucks to be here in a car, too. There's a market there.
Having said all that .... yeah, the traffic will be a very severe challenge, I do not deny that. I'm not quite as pessimistic as you are.