There are 3 large constraints on any Light Rail System that TfW are trying to force through.
Firstly the twin track Newport Rd bridge in-between where the Rhymney and Taff lines converge and Queen St station. Building an additional bridge would be very very expensive and highly disruptive to a main city artery. Therefore whilst you can get 24 tph over it they have to be split between the Rhymeny (12 tph) and Taff (12tph) lines restricting the capacity north of Cardiff.
If the two-track bridge is re-signalled for light rail, then the 24tph limitation disappears. Light rail signalling on dedicated tracks is as high-capacity as you can possibly get.
Secondly the City line is not an option for LRT trains from the Taff Corridor as it runs around the throat of Vale Lines which are to stay Heavy Rail and the access from central station into Canton depot.
Only if the LR trains are not permitted on HR tracks. Even if the core Valley lines are handed over to a separate LR operator that does not mean the vehicles can't be capable of running onto NR tracks. Incidental sharing of tracks between LR and HR is exactly what the tram-train concept makes possible. In Manchester, the benefit of trams and trains being able to share the short few hundred metres of track through Navigation Road or Newton Heath and Moston would be enormous. In Cardiff, you could have Metro trains running around Canton as if it were part of the LR network, while the occasional HR train can still get in and out when necessary.
Then the Welsh Government had to invest in the whole network and not just do an LRT replacement of heavy rail lines north of Cardiff Queen St which is what we have on the cards here.
The current Proposals are not a "South Wales Metro" but a vehicle to wrestle control and power over something from Westminster and present something shiny and new to the masses of the valleys. everything that will develop a metro to the wider area is back loaded to undefined future stages. There's two political objectives front loaded in this which are not necessarily aligned with the best solution for public transport or the economy of South Wales.
But as I've said, there
will be political consequences if that's the case. As demonstrated by Scotland, the Additional Member System makes it very hard for governments to rest on their laurels, regardless of how politically and socially established they may be. If Carwyn Jones ruins the Valleys for the sake of his party's ego, his party is going to face the consequences.
I think Metrolink probably regret the high platforms now as most of their network is new-build (nothing was re-used on the Oldham line, unlike Bury/Altrincham), but at the time low-floor was in its infancy - Sheffield was probably one of the world's first low-floor tramways. With the Valleys I can see high-floor saving a lot of initial cost in allowing a Metrolink style conversion, though possibly with a lower-than-rail-standard floor (in the manner of the Merseyrail FLIRTs) to allow level boarding throughout.
'High floor' trams have an internal floor height approximately the same as our nominal 915mm platform standard. The Merseyrail FLIRTs have a 965mm floor, as opposed to the 1100m standard for most modern EMUs.
Regarding peak capacity concerns, it is important to understand that the heavy rail network would only ever run at this capacity for a very small amount of the day. Sure, this is handy at peak times when there's plenty of demand to fill trains, but it comes at the cost of flexibility in the off-peak. Heavy rail can't handle off-peak (i.e. most of the day) as efficiently as light rail. Off-peak HR frequencies are often as low as are operationally feasible, meaning that the service isn't really that useful for a lot of people. Trains can't run that early or that late since passenger numbers drop below the point of services being at all viable.
With light rail, capacity can match demand much more efficiently throughout the day. Services can run earlier and later, and at higher frequencies, without incurring uneconomic running costs. As services become more frequent and run for more of the day, demand naturally rises as the train/tram is a more viable option for travel. It's much easier to get into the virtuous circle where increasing demand means it's viable to run more services, which increases demand and makes the whole network more economically viable.
We have to face the fact that the heavy rail Valley Lines network requires significant subsidy. Meanwhile, a
well designed LR/combo network presents an opportunity to reduce that subsidy. I'm not against subsidy, but it has to be remembered that this subsidy has to come at a cost. If the same or more transport benefits can be delivered with less subsidy by LR, then it is unarguably the better option. If it can only manage to equal the benefits, then the reduction in subsidy can be used to fund other worthwhile things, from general public services to subsidy for other, more needy public transport causes.
The ideal outcome is that a LR network grows enough to become self-sustaining, like in Manchester. The city no longer has to go begging for investment, because it is self-evident to the people holding the purse-strings that extra money invested in Metrolink means more profit in future. Lots of worthwhile ideas end up floundering because they require not only upfront investment but long-term subsidy. The schemes most likely to be funded are always those which end up reducing subsidy over the long run - e.g. a simple extension of a service that already runs without requiring too many extra crews or trains.