What you're seeming to miss is that the GO service doesnt go to MCC. Cooksville GO station is 1.5 km from Square One. And if you think that that station is going to be moved to better service Square One, you're dreaming even more than people who want a subway are dreaming.
Have you driven down Hurontario lately? The section from Eglinton to Cooksville GO is almost like driving on Yonge St between Sheppard and Finch. It's the densest corridor and area outside of the City of Toronto in the entire GTA!
And I find the argument of "well there isn't much along Dundas, so there's no sense in building a subway there" to be quite dubious. Yes, I agree, on it's own there isn't much to warrant a subway, but none of the major E-W corridors between the 427 and Hurontario have much on them to warrant a subway. But the fact of the matter is that Hurontario needs one, so might as well pick a corridor that has good opportunities for densification to get it there. Remember, there isn't much along the Scarborough RT route between Kennedy and STC, yet the line is still very well used.
And it would be the City of Mississauga and Metrolinx paying for the line, once it passes Sherway it's out of Toronto's hands in terms of capital funding.
There is also no reason why even if the subway is there, people couldn't choose to get off at the Cooksville stop and take the GO train from there, if they really wanted a faster route downtown.