This article has a lot of text before getting to describing the problem. Summary: Train wreck 1995 and a installation of a safety-first, CYA response that slows down the trains and does not increase safety. Longer Summary: Train wreck in 1995. Maybe driver was asleep. Start installing new signals that not only automatically stop the trains when there is a train ahead (good idea and already in place), but also when go…
I agree with most of your summary, but I don't believe the article provided evidence that installation of signals to enforce a lower max speed "does not increase safety". I'd speculate, without evidence, that it probably has increased safety. But maybe it's just a bad tradeoff, compared to other options.
Besides--reduced capacity causes platform crowding which is dangerous and displaces passengers into other modes of transportation like foot or automotive traffic, both of which are more deadly per passenger-mile than the subway.