There's nothing wrong with the current Eg West station. Those slivers of land are not desireable for development and not worth much. If anything I would use a bit of the land to add a few more turn lanes to the Allen intersection, but the rest is not worth much. Parking, maybe.
Re: interlining: The wye for active service rather than a direct connection to Wilson so would be monumentally expensive, far too expensive for the low ridership such an interchange would incur. If you look at the local traffic patterns it's pretty evenly split between going north, going south, and continuing west, northern interlining might have some benefits (removing a transfer for those continuing west across the north end of the city) but probably not enough to justify the costs. Notably, most traffic on the existing Sheppard line is heading downtown, and a northern interline begins to serve suburb-to-suburb commutes, which as we know tends to be sparse on transit and not really best served with expensive centralized infrastructure.
The diversion effect is probably near nil. The spadina subway is too far west and the stretch between Eg W and Museum is far slower on the Spadina than between Eg and Wellesley. The run down Spadina from Downsview is about 5 minutes slower than the run down Yonge to the corresponding cross street; add another 5-8 minutes on Sheppard and you're tallking about a lot of extra minutes, too many to be offset by skipping a transfer. It will not ever be a significant traffic pattern. Remember, by 2020 average transfer wait will be less than one minute, and Shep-Yonge is a pretty simple transfer.
You can draw all the grand plans on a map but the fact is that a Sheppard subway is not going to be a heavily used piece of infrastructure and there are better places to spend a quarter billion dollars than massive complex interchanges on Sheppard Avenue.When you look at actual traffic analysis, it becomes clear why a westward sheppard extension was never really on the map. It's simply not a useful line.
