I think the solution to Union's capacity issue may be to have "Shoulder" stations on either side of Union. Pearson can be one in the West, I'm not sure about the East. Much like the proposed GO Stations on either side of Union would reduce dwell times, service to Toronto would terminate/originate at Pearson (for routes coming from/going to the East, While service from/to the West would terminate/originate from the East station.
As much at the Midtown line sounds appealing for avoiding Union, I'm not sure there would be enough demand without service to Union.