Single the line full stop! It will never need more than a half hourly service again which only requires a single track line with a new loop at Brading. If more capacity was needed then platform extensions and SDO would be cheaper than extra track and signalling. Replacing the tunnel portals to allow the tunnel track to be scewed down the middle for maximium loading gauge would be very beneficial, as would the IoWSR opperating from Ryde rather than the middle of nowhere. As you have pointed out there are more options for the Esplanade station if it only needs one track and one platform. The line has one shot at modernisation and needs the lowest opperating costs and infrastructure risk as possible. 8 and a half miles of third rail, double track sections, loops, a pier, a very low tunnel and a big opperating subsidy are not a great mix. A single line, one loop, a singled + scewed track in the tunnel, a charging point at the depot and Shanklin (with a battery station to avoid a sub station) and 6 x 2 coach 230s would be a low cost solution. Batteries for cars are expected to last about 7 years and the 230 batteries could be replaced by smaller lighter batteries with the same range halfway through their lives. The impending PRM-TSI deadline would provide a good time to close the line for work from the end of the 2019 summer season to spring 2020, providing plenty of time for Vivarail to build half a dozen 230s.
I'm thinking that 8 miles of that 8/1/2 mile 3rd rail are no longer necessary with BEMU operation.
you just need three small 750VDC charge points.
even if you just ran D78 stock(or 313/507/508) as is, the power gear would need to be replaced from clapped out 630vdc stuff anyway.
The key to getting better profitability for the line,and justifying the expense is better marketing IMHO...yes primarily for tourists,because they spend a lot of money in the local businesses to keep them running.
my 2p worth:
1)From the mainland,a fully integrated IOW travelcard should be available- like a london travelcard. covering train on mainland,ferry,and ALL bus,train,tram on IOW.
2)Said travelcard available for longer durations at a discount for IOW residents
3)employ pay as you go "smartcard" technology on all IOW transport like oyster but simpler....same process, but purchase and topping up points at main ferry/hovercraft terminals, main bus and rail stations in IOW, and also top up points in selected newsagents chains ie WHSmith.....you need the brand to to associate with top up point.
this also negates the requirement for 1 guard/conductor per train, just a random revenue inspector with a scanner floating between journeys.
4)Have IOW travel heavily discounted/free as a bonus for mainland annual season/gold ticket holders ...to drum up business via days out and stay-cations.