East-West rail is still the worst in North London so any improvement there is hugely welcome!
The North really needs a tramlink of its own to fix the gaps though. To travel the 4km from Harrow to East Barnet takes 90min by bus, or 70 minutes by train via central London. God knows why people harp on about improving transport south of the river.
It's just as bad farther north. There is literally no way to go west from the ECML between Peterborough and Harringay (which involves a walk down the road and involves a station where only inner suburban trains stop).
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Given a fantasy pot of money, extend the DLR from Bank to Moorgate where it takes over the Northern City line to Finsbury Park and then extended onto a rebuilt Alexandra Palace branch via Highgate.
Realistically, the section north of Alexandra Palace would continue to be served by some NR trains (just as the suggested extension to Hertford East). A lot depends on whether TfL wants (part of) the Hertford loop to be incorporated into its network or not - either as Overground (as suggested by others here) or Crossrail 2.
Easily. I think you're reading a lot into a diagrammatic map to infer that the platforms at Ally Pally will be aligned E-W.
That does look like the Palace Gates line, although that ended up slightly farther east, terminating in part of Bound's Green.
http://en.wikipedia.org/wiki/Filextract_of_1900_Map_showing_Palace_Gates_Line.png