My main concern is how well of an interchange function with YUS the central Bay station option provides. By default that would have to happen at both ends of the station, but it's unclear how that will be integrated - Yonge is fairly shallow, with no mezzanine worth talking about and everything have to happen underneath (which might be a plus, given how awful that space is); University has limited mezzanine space which would presumably be able to provide a bit more flexibility in terms connection. If you are talking about that level of construction, you might not end up saving that much in terms of costs.
No doubt the connection would need to be from underneath the platform levels at both locations, seeing as how Bay would need to be a pretty deep station. For University you may end up with a St. George-like connection, where someone would walk down to the University platform first, and then there would be a 2nd set of stairs to take them a level lower. For Yonge, the connection could be similar to Bloor-Yonge, with stairs in a recessed area off the side platforms.
These would be secondary exits though, primarily used for transfers. The main exits would be away from the existing subway stations, and would offer direct access.
And given the amount of proposed development (office commercial, retail and residential) putting a station there is almost a no-brainer. Depending on the alignment, burying a chunk of the Spadina LRT to make a fully underground interchange could be worthwhile.
AoD
Agreed. And yes, I would think that an underground connection would be better for transit connections, pedestrians, and drivers. It may be worth it to actually have the LRT go under the rail corridor and surface south of Bremner (using the natural slope to its advantage).