I might as well just re-state my personal thoughts on this.
I think for any sort of rail system to be worth while, it needs to serve the central downtown area, that would be the area between Citadel Hill and the waterfront. Large commuter rail trains (such as GO in Toronto, or AMT in Montreal) are just too large and akward to navigate Halifax's tight, busy streets, without being buried or elevated. And I think most people would agree, burying or elevating the tracks for any significant length is just either way too costly, or would encounter far too much opposition.
LRT uses smaller vehicles, often electrified although not always. They can operate both within and outside of downtown.
My ideal system would be to utilize the existing rail cut to the Via station, then to the Cogswell Interchange site which, when eventually torn down, I forsee as being a major downtown transit hub. It could either at that point reverse back to the rail cut, or continue along by the dockyard/Barrington area, up to Richmond and re-join the existing CN tracks.
Now to do this, Lower Water and Hollis Streets need to be made one-way streets for their entire length. I know this is something we've discussed before, and honestly this needs to happen regardless of rail service through downtown. On-street parking needs to be seriously restricted in some parts as well. Then you have two, 2-lane roads through downtown that could both accomidate vehicles and LRT traffic. It's all pretty much straight roads too, so you're not going to have large rail vehicles making tight turns onto Spring Garden or Quinpool/Cogswell, you get your service from areas like Clayton Park/Fairview, Bedford, Windsor Junction and Beaver Bank direct to the downtown central business district, and no transferring at the Via station.
If the Cogswell area redevelopments could include some sort of downtown transit terminal/hub, you could also run a couple of electric trolley coache (not rail) routes along areas like Barrington, Inglis, Spring Garden, Oxford, Quinpool, maybe Gottingen and Agricola as well, with frequent trips departing the downtown terminal.
http://local.google.ca/maps/ms?ie=UT...45976&t=h&z=12
Keep in mind this also shows a possible Dartmouth expansion, assuming a 3rd bridge or tunnel were to be built.
Also, my downtown trolley coach map:
http://local.google.ca/maps/ms?ie=UT...38b39&t=h&z=14
Featuring both a north-end and south-end route. I think the south-end route does a pretty good job hitting most of the major points of interest.