1) The bus would still run. I would also suggest that that is an extremely niche scenario and increasingly so.
Based on the use of the buses I've seen, most people travelling from the Stocksbridge end are wanting to go to the stops around Hillsborough. I would suggest that the number of people who are willing to go to the city centre via Nunnery Square and then change train to get to the city centre is the niche scenario.
2) The optics have changed, local government can no longer use Stagecoach to hide behind.
When it came to extensions, it was always central government that they hid behind. Even if the optics have changed, the financials haven't, which is what has caused the problems in the past. Considering that there are also calls to close the network down rather than do all the heavy maintenance / replacement on the infrastructure and fleet because of the lack of funding available, the chances of any meaningful expansion are pretty much zero.
I'm assuming they'd reinstate Wadsley Bridge station, it'd be short sighted not too, plenty of football traffic could be picked up there as well.
I'm not sure I'd use the word "plenty" - "some" maybe. It again falls over on the problem that it doesn't go via the city centre, it bypasses completely all the traditional Wednesday supporter areas, so you're reliant on those who are already living around the Darnall / Woodhouse stations.
Frankly, if there wasn't already track running up to Stocksbridge, nobody would be suggesting we run a tram up there. There's no business case for it, the line is on the wrong side of the river and it doesn't stop anywhere useful. It often seems like the main reason to run trams up there is so it opens up the possibility of getting to Penistone. Then we could open to Dunford Bridge for the peaks. And if we've got that far, we may as well carry on to Manchester...