Much as I would love to see trams in Oxford (and after all, we had them before!) I agree that the city, and therefore its traffic flows, are far too small to justify the cost.
Of course, Oxford had tramways in the past: http://www.oxfordhistory.org.uk/high/history/transport_1905.htmlWith a) I agree except that if you are going to extend the current Chiltern Railways service from London Marylebone, you are going to need to completely rebuild Oxford Railway Station in order to allow platforms 1 & 2 to become through platforms.
b) Good idea, although I'm also of the opinion of having another station in the Cowley-Blackbird Leys area. Certainly useful for match days!
I also wonder what @BrianW and @Parebunks have to say seeing that the two of them also live in Oxford just like me!
and has its share of proposals for the future

Perhaps, as IIRC Tim Dunn has pointed out regarding trams in London, esp the Kingsway tunnel, trams could run with power supply from in the road 'in town' (thus 'protecting the historic environment' from unsightly infrastructure, and overhead wires beyond.
I'm not sure but I think the Oxford tram routes went by-and-large similarly to the current P&R routes, i.e north-south and east-west crossing in the city centre at Carfax.