At the end of the day the ECTS is a bus pass and so should only be allowed to be used on BUSES!!!
I don't think it should be valid on National Rail, unless that service is paid for by the PTE - for example up here Nexus fund the services between Newcastle and Sunderland.
To me the pass should be valid on all local transport operated by a PTE, however only the bus is free. Other transport - such as Metro - should be charged at a flat yearly rate. All pass holders can get the extra additions of that area, however they must also pay the yearly rate, and for outside residents the price is allowed to be higher but not too significantly, no more than double. For example, I live in Newcastle and buy a Gold Card that allows me travel on the Metro, Ferry and Rail between Newcastle and Sunderland. This costs me £25 a year. If someone from South Yorkshire wanted travel on Metro they would either pay Adult fare, or could pay £35 for a Gold Card. This would be to their benefit if they plan to come back to the area, but if they are just visiting once then it would be more worthwhile to buy a full adult fare.
I think the main thing however, is that Central Government should pay for it and a charge be brought in. Maybe say a £10 admin fee for the card, then all additional fees for other public transport services would go to the local PTE, Central Govt. take a cut out of that though.