I am far from an expert on Sheppard, but it seems to me that what's currently on the books--LRT from Don Mills east to SCC and beyond--is the worst possible option. Having a dumb transfer so folks can ride four stops to Yonge and then...transfer again, possibly only having to do so a third time at Finch if headed west, is insane. My vote is to either build out Sheppard as a subway, like it was intended, to SCC (and one day to Downsview) or, much as it pains me to say so, convert the whole damn thing to LRT. Either will be more expensive than what's proposed now, of course, but both would result in a real boost in network connectivity across the top of the city. The lesson of the Scarborough RT is that we shouldn't be building orphan lines, no matter what the reason. If the city is dogmatically opposed to a proper subway on Sheppard (which it shouldn't be, but alas), I would rather the whole thing be one technology.
In my perfect world, however, Sheppard and Eglinton are both full-length subways. connecting with a subway DRL at Jane and Don Mills. Lucky for me, I think that might be Metrolinx's perfect world also (with the caveat that they are talking about a subway on Queen, which would be...unwise).