Earlier quoted context omitted.
I have a few nitpicks... Making train tunnels cheaper by making them smaller is not a new idea. it is a very old idea. Have a look at the deep level tube lines of the London underground. In some ways, we regret having trains that small since it reduces capacity and makes it nigh impossible to air condition. It's possible to make normal trains go over existing roads, elevated rail is also a very old thing, a lot of it…
Normal trains are designed to support very high loads, as they are using tracks suitable for cargo transport. For urben people transport, you don't need that carrying capacity, so the rails as well as the trains are unnecessarily heavy. Also, the wagons are larger than needed. It absolutely makes sense to rethink the whole system.
Also if you want small trains, just look at the UK. Normal trains here are much narrower than normal US trains, they are about as wide as modern trams! And the London underground has trains that are tiny and shaped to make the most out of circular tunnels.
You don't need to rethink the entire system for the points you've raised there...