The plans for what could happen would fill many pages, so I'll try and condense it down and if you need more info just ask.
Main problem stopping any further development westwards would be the cost of tunnelling - you have to remember that only a small section of the network was new, and only a couple of kms or so was new tunnels. Main reason was to penetrate right into the heart of the City Centre whereas former rail routes would have missed the main streets around Monument. There was also a thread a few years back which mentioned the associated Central Motorway being built around the same time, which was also supposed to be mirrored on the east and west end.
With the demolition of the former Scottish and Newcastle brewery I've been told that some of the land has been spared for future transport use. If you remember the Project Orpehus plans, the west end would have been linked to the Metro network by tram-trains above ground, coming out of a tunnel somewhere to the immediate west of St James station, so keeping some land free on the brewery site is a good plan. However Project Orpheus was quitely shelved/put to one side by the All Change programme, which (IIRC) has some plans for tram type stock in Part 3, when the current fleet is due to retire. They are undergoing the 3/4 life refurbs so will probably be around til2020/2025, so the replacements could be used on road too.
The only parts of the west end to have had a historic railway service were along the bottom of Scotswood Road, so including Elswick, Scotswood and Newburn. The line was still open to serve Stella North Power station until that closed, when the former freight only line was reopened on the south side, with Dunston reopened and MetroCentre built. The old line used to cross a bridge and into Blaydon station, which is still there but you wouldn't be able to use it for trains again due to its condition. Plus some of the land has been built on on both sides of the Tyne. If the Metro were to access the line along Scotswood it would realistically have to come out of Central Station as it would need a lot of work and a massive s-curve to allow it to drop down from St James. If it did run to the MetroCentre, there would be the same problem of getting the Metro back to Central - either a new tunnel in Gateshead or reverse at MetroCentre and go back through Blaydon/Scotswood/Elswick.
Nexus seem to be favouring bus-based developments in Tyne and Wear, which is undertstandable as most PT journeys are by bus. Tram-train does offer the best solution available unless the money can be found to extend the line in a tunnel towards the west end.