This is a headache of a discussion, and yet I've read most of it and am now caught up.
My first thought is that some of you are making this way, way too complicated. My second is that you all have different ideas about how everything actually works, and some of you have ideas that are a little sideways to what is working right now. The "you" I'm referring to extends beyond this forum and includes people in general, and city council.
Freeweed, thank you for writing things that I actually enjoyed reading, and often agree with. Such as, that some people don't actually use the system much and therefore don't understand it well. I'll be using that point in a second here.
So, I'll throw a few of my own ideas out. I occupy an odd demographic; A captive transit user (who uses transit to go all over the city, often), low income, downtown worker, who is just moving from a near-LRT suburb to a near-LRT somewhat inner-city community.
I currently use a monthly pass. It is convenient; I get on a train and/or bus and go where I'm going. When Smart Cards are implemented, I will do more or less the same thing, depending on how they set it up. I would like to do more or less the same thing. As a captive user, I make short, trips, long trips, trips across downtown, trips from one terminus to the other (although not living near one will lessen that), etc...
Geographical zones: Where? How? What boundaries, in a city that is radial and has few natural barriers? How do you include students, as the 3 main post-secondary institutions are not downtown? It's a headache just to think about, and no-one has explained how it could work. So, it won't. Forget about it.
Distance based: doesn't cause a headache, but makes it inconvenient and potentially costly to make the variety of trips I make, or the variety of trips the variety of transit users make. Everything here (as has been pointed out) leaves some group with the short end of the stick. Requires changes anyways. Worth it?
Fares: What we have is not the most efficient setup, with cost or logistics, or flexibility. Or fairness. Most of the ideas I've read aren't either. When going anywhere with someone who doesn't have a pass like I do, or when I don't get a pass purchased by the first of the month (and since they sell low income passes at four places, two downtown which have the same hours as I work, and two in far-flung suburbia where I can't easily take transit to), then a lot of money is spent on tickets and fares. If you change it radically, that is enough of a disincentive right there to compete with any gains. So, slow down and think.
I've now typed far more than I should have. I'll respond if there's something I want to comment on, but ultimately I have no more idea what I'm talking about than most of you