In my experience with MCC, I think a station at Cloverdale would be way more benefical than one at Sherway. I'd say the two busiest routes on MT to Islington right now would be the 1/1C/201 (Dundas/Express) and 26/206 (Burnhamthopre/Express). The 1 could just drive up to Cloverdale and the 26 could be re-routed along East Mall which in my experience moves faster than Burnhamthorpe (The same applies for the 3 Bloor). The East Mall rerouting would also make those NIMBYs who every 26 rider will remember blocked the buses back in the 90s because of the "noise". I've never taken any of the MT routes that take teh 427 to get to Islington so I don't know if a Cloverdale station would be an advantage for them, but I'm willing to bet it would be better than a Islington station serves now.
From my experience with living in Southern Sauga, I can say that a Sherway station wouldn't really be all that benefical. It would cut down on time for riders already (I take the 23 to Long Branch and then connect through either the 123 (Kipling) or 110 (Islington) depending on where I'm meeting people which is between 10-20 mins faster than transfering twice in Mississauga) which would be good, but MT only has one route going there which already doesn't see much ridership as the area in Southern Mississauga is pretty much low density with the occasional high/mid density areas (Port Credit/Clarkson) and a large percentage is already pretty well off so nice cars aren't uncommon. From my persepctive, I just can see a Sherway station being justified compared to one at Cloverdale. While it would be nice for me I just don't see it getting the ridership, both from MT and the TTC.
EDIT: Ideally imo, the best routing to SQ1 after Kipling would be to just follow the railway tracks with stations at Dixie GO (5), then Dundas/Cawthra (1), Cooksville GO (19) and than bore up to SQ1 (Terminal). That being said there are the problems of CN (or is it CP) with the ownership of the tracks, crossing the Etobicoke creek, the fact it would essentialy be a "GO Train" and could be replaced by all day cheaper go trains. An intermediate rail or S-Bahn (I believe it's the most compareable) would make more sense for the route I described, but it likely could only end up like the RT and only would end up being a band-aid solution. That being said, I still feel a station at Cloverdale is the most senisble place for a westward extension of the B-D line. It is closer to denser areas, it would likely provide for better conectivity and it's a extension.