I respectfully disagree. The object of Transit City is to improve local service along the corridor. Moving to station spacing at this distance would require a bus route to overlap the LRT line, defeating the purpose of improving local service along the corridor.
1) These are not going to be slow moving streetcars. Preliminary analysis indicate that these vehicles will be traveling faster than the current bus route currently does, and much faster than any downtown streetcar line ever does.
2) If an urban node really does develop around stations, then adding more stations will result in more nodes. Moving these stations closer together will bring the nodes closer together until you have a string of urban development along the corridor - which in my opinion is much better than a series of disconnected nodes. Many would argue that the constant string will happen regardless of station spacing, assuming appropriate land uses policies are used. If this is true, we run into the problem of serving the areas between stops. In my experience on the 97 Yonge bus, people don't won't ride 500 metres to the next station. They tend to ride all the way to the major terminal, resulting in a second tier of service for people who have destinations between stations.
3) For an able bodied person, walking a few hundred metres isn't a problem. But, we also want to encourage people to do their shopping on the corridor and carry big boxes home with them. We want to make it accessible to seniors and people with disabilities who may not be able to walk that far. Of course they could use the overlap bus service, but that results in the problems above.
And then there is the matter of serving the existing development... Through Rexdale, Jane-Finch and generally most of the corridor, many of the mid-block stops are just as well used as the major arteries. I grew up there, and while I'm not an expert, it wouldn't be right to improve transit for the minority of riders on the corridor and make others walk much further.
I'm not saying that 1.0 kilometre station spacing is bad, I'm saying that it doesn't fit with the objective of the transit city philosophy.