There were two options, elevated, and below grade. The EA noted that the above-grade option would result in a high adverse effect on the existing community due to potential noise impacts, visual issues and loss of park/open space. The end result was below grade, though it doesn't massively add to cost, given there are no stations in this segment, and Malvern station would still have been above grade.
I'm sure comments were made at the community meetings, but the need to grade separate it, always meant it was going to be costly. And I think that's been recognized since the 1980s. I certainly don't think that it was the NIMBYs that forced it underground. And I don't think that is what lead to it's deferral. When they deferred it, they identified that segment would cost $386 million in $2010. They also deferred the cheaper and longer segment of the Sheppard East LRT from Morningside to Meadowvale which was only to have cost $100 million. And they deferred the more expensive pieces of the Finch LRT ($460 million from Keele to Yonge) and Eglinton LRT ($467 million from Jane to Renforth). It was all about cutting sections of the line to save money. If that was only budgeted at $150 million, I expect it would still have seen the axe.