1) my journey involves London Underground, so I read that as I can’t use my ticket there on alternative days.
That's TfL's policy, yes. But like many TfL policies regarding National Rail ticketing, it doesn't really have any basis in law. They've just come up with that policy because it's operationally convenient - as it means passengers won't have to be let through gatelines manually. The fact that it happens to generate them more revenue from being 'paid twice' for the transfer is also a nice secondary benefit.
Pursuing TfL over a cross-London fare costing a few pounds is admittedly unlikely to be considered worthwhile by most.
I could only stay another night, but who would pay for that?
Northern, if you choose to take the option to take the next available train. Of course, they'd once again likely refuse to pay initially, but ultimately fold when things are heading towards Court - sometimes when you make a formal complaint, other times when you send a Letter Before Claim, and in a few instances once you begin a claim and they need to admit it or else submit a defence.
3) if I refund the return leg, how do I get home? Or are they suggesting refund both and use alternate transport instead?
Train companies fail to consider scenarios like yours when pushing refunds as the solution. They're not interested in helping you out; they just want to move the cost and inconvenience of the strike onto passengers.
This is a contentious area
Which part of it is contentious?
The fact that the train companies are, indeed, obliged to get you to your destination if you choose not to take a refund can hardly be viewed as contentious, if that's what you're suggesting.
it isn't helpful to rephrase the actual legal obligations to distort their meaning
Would you like to give an example of what you mean by this?
If a transport contract is frustrated
There can be no suggestion the contract is frustrated. Frustration of a contract requires several elements, none of which are present here; there must be a supervening event which is beyond either party's control, and that event must fundamentally alter the nature of the contractual obligations such that performance is rendered impossible or illegal. The event must also not be caused by any fault or negligence of either party.
A strike being called as part of an long-standing industrial dispute is entirely within the train operator's control, and indeed it could readily be argued that the train operator has been negligent in its management of industrial relations. In any event, nothing is preventing the train company from upholding its end of the bargain by providing alternative transport.
the passenger has the right to be transported from A to B, but not necessarily at the same time or even on the same day
If the contract were frustrated, it would be discharged (i.e. the money would be refunded and the ticket cancelled), so neither party would have any further obligations or rights.
The PRO is clear that alternative transport should be provided "at the earliest opportunity", whilst consumer law requires train companies to use "reasonable care and skill", which implies a degree of competence. When buses and taxis are readily available in a well-populated area of the country, it would be absurd for a train company to suggest it couldn't do so contemporaneously, let alone the same day.
The PRO obligations require alternative provision where it can 'reasonably' be provided; that is not the same as 'come hell or high water'.
There is no 'can reasonably be provided' proviso to train operators' PRO obligations; they are contingent only on being "where and when physically possible" - in other words, financial implications are immaterial. But in this case it is plainly reasonably possible, at a reasonable cost, for the train company to provide alternative transport.
It's worth remembering too that the dynamic here is very different from that seeking to regulate private activities. The TOCs (bar a handful of open access services) are publicly funded operations.
Train operators are subject to consumer, contract and railway law. In many ways they are
more heavily regulated than ordinary private companies. The fact they are publicly funded is in no way a defence to their obdurate refusal to comply with their obligations; if anything, they should be setting an example by doing things correctly.
The interpretation of the various statutes is not undertaken by evil cackling overlords while they ogle their brimming chests of treasure
I don't think anyone is suggesting that the railway is making huge profits at the expense of customers in holding this policy. The railway is fundamentally loss-making and in all likelihood will remain so in perpetuity. None of that changes the fact that the railway can't get out of its obligations by waving some magical wand.
it is instead based on guidance from departments of the very same Government that the enacts the legislation
I would be very surprised if the DfT is instructing TOCs to adopt any particular position in relation to assisting passengers with alternative transport options during strikes. Do you have any evidence to suggest this is happening?
which the courts have to interpret
Courts interpret the law. They have no regard for guidance that a company's owner (whether governmental or otherwise) gives it about whether it should act in breach of contract.
So the likelihood that the floodgates would open to all sorts of generous provisions if only the TOCs could be forced to do so is slim.
It's hardly a 'generous provision' to be provided with alternative transport during strikes, when you hold a pre-booked ticket. It's the kind of obligation that exists in many other parts of the transport sector. It's really just the bare minimum you would expect any reasonable company to provide.
One individual bringing a claim against a train company is not going to open the floodgates to anything, in any event. The OP has come here for advice; I am not sure that it is really helpful to them if we pontificate on whether their rights under consumer and passenger rights law are generous or not.