Surprised nobody has mentioned the Bala Lake's extension to Bala:
https://balalakerailwaytrust.org.uk//route.html
As regards main-line connections, to most people, a preserved railway is purely an attraction to visit, like the seaside, the adventure park, the shopping centre, etc. and they will no more think of using the train to reach a preserved railway than they would to get to any other attraction. So, while there is no doubt that a main-line connection will bring in additional traffic, it will only bring in significant numbers where there are a lot of people used to travelling by train to get to places. That is why the Bluebell's extension to East Grinstead was so successful, because it tapped into the London commuter market: a large number of people who automatically think of using the train/tube to get to where they want to go. Likewise the SVR and the K&WVR, whose connections tap into the significant Birmingham and Leeds commuter markets. Compare those with the EVR's connection at Duffield, or the FR's connection at Blaenau Ffestiniog, both of which undoubtedly bring in useful numbers of passengers, but not significant numbers, because very few people in those areas are used to travelling by train to get somewhere.
If you double the length of your line, then roughly speaking, you double your costs. You have twice as much infrastructure to maintain, and to keep running the same frequency of service you will likely need to run twice as many trains. So, unless you double your income, you will lose money by extending. Doubling the fare would not be enough - a significant proportion of most lines' incomes comes from sales, and most people will not buy twice as many Thomas toys and eat twice as many sandwiches just because the ride takes twice as long.
Bearing in mind that joe public just sees you as an attraction to visit, competing with all sorts of other attractions for his money, increasing your entrance fee is going to make you less competitive compared to the other local attractions. As has already been pointed out, increasing the length of the journey may also make your line less attractive, e.g. to families with little children, who may decide not to do the full trip.
The extensions that pay for themselves are those that bring in significant numbers of extra passengers, and their extra revenue, because they make the railway more attractive to visit (e.g. because they take you somewhere interesting), or make it easier to visit (the mainline connection).
The Ffestiniog and Welsh Highland Railways are an interesting case, in that the Welsh Highland was not built as an extension of the FR, and they are deliberately marketed as separate entities, rather than one long railway.
