It's absolutely not a white elephant. It will spawn significant developments along the route and those will all be transit-oriented neighbourhoods. It will also be the only LRT route in the city that wasn't built along a major car sewer (Crowchild, 36 St NE, Macleod, and 17 Ave SW). Even those very poorly-located LRT lines have seen significant densification in the past decade. Victoria Park, Ramsay, and Lynnwood all stand to become some of the best neighbourhoods in the city.
Building a mass transit line through a city centre is incredibly difficult, but once it's done, it becomes significantly easier to expand it further into the suburbs. We can't let perfect be the enemy of the very good.
1. To the extent that there hasn't been a lot of TOD on existing lines likely has a lot to do with the fact that these stations were designed to be "park-and-ride". They're almost all along giant car sewers and surrounded by service roads and parking lots. The fact is, that there are very few stations that can accommodate TOD on the existing system. Stations like Brentwood and Heritage have seen densification in spite of their location/design. These are extremely unpleasant places to live without a car.
2. In terms of Westbrook station, partly this is due to the fact that all the land is owned by a single developer that is just sitting on it. However, there is a clear transformation going on along 17 Ave and 33 St in Killarney. Would that development have occurred even without the LRT? Probably not. But even if it did, it would have been a neighbourhood without access to mass transportation.
3. I really, really don't understand the idea of "diluting" TOD lands. Are we supposed to be trying to restrict the number of neighbourhoods with access to mass transit?
We should build transit because it's simply the right thing to do; it improves accessibility, reduces emissions and so on. But that being said, Calgary has a problem with TOD sites sitting undeveloped and underdeveloped, which IMO is due to three things beyond the urban realm around the stations.
One is the planning processes not providing enough support: not permitting enough density, not reducing parking requirements, being stopped by local resident opposition, allowing the loading dock of a Superstore to be next to the transit station.
The second is absolutely dilution and the lack of coordination. A TOD node needs (relatively) dense mixed use; but developing that is a coordination problem. You need a coffee shop and a couple of restaurants and at least a convenience store if not a grocery to create the start of a TOD; but you need a bunch of residents within walking distance to support coffee shops and convenience stores. If there was a single TOD site, then there would be people willing to take a chance, but with 30 TOD sites, the risks are too high everywhere. The East Village sat for decades with nothing happening; the CMLC intervention provided a coordinating signal that this area was going to go, which meant developers were willing to build the towers and businesses were willing to locate there and that made spaces and places for residents. But it was mostly a signal; the area's always had pathways and a bridge to a park on St Patrick's Island; the library was always a short walk away; the National Music Centre isn't that heavily visited. The area didn't functionally change all that much -- more a signal said "okay, go here now" and everybody followed. But with all of that said, it's not like going from 30 uncoordinated TOD sites to 35 will change anything substantially. The problem is that picking three TOD sites to prioritize will upset the developers and landholders of the other 27, and Council isn't willing to do this. (This is also why the TOD nodes that have done the best -- Heritage, Dalhousie, Brentwood -- are the ones that had some retail at them before the train was there; this reduces the coordination problem.)
The third -- and the overwhelming leader -- is that we allow all of the new development to go into greenfield sites (and beyond into the region). TOD sites and the inner city are getting 10% of new development, so there's a problem with it not being concentrated. If they got 50% of the development, then this coordination problem is lessened substantially; they can and will all go at the same time.
Those three neighbourhoods you identified, though, are three terrible examples of new TOD potential. Building new LRT stations adds accessibility. In Victoria Park, the LRT station will be 700m walking distance from two different existing LRT stations (both of which are easier to get to, since they're at grade.) Plus the area is already walking distance to the downtown. Ramsay is similar; it's already very accessible to the downtown; community pressure here and in Inglewood keeps the densification from happening, and I'm sure the NIMBYs will still be living there five years from now. Lynnwood, on the other hand -- you blame the lack of TOD on "park and ride" stations with "car sewers". Ogden Road at the Lynnwood station is 60 km/h, four lanes, 16,000 vehicles a day -- not too far from the 21000 on 17th Ave SW at 69th St, or the 25000 on 36th St at Rundle -- and the station has a big ol' park and ride lot planned, which makes sense given all the polluted land around the station.
Honestly, the first phase of the Green Line doesn't have much TOD potential at all; 16th Ave N perhaps, then NIMBY-dominated Rosedale, then the already-accessible downtown and Beltline, then NIMBY-dominated Inglewood/Ramsay, then a bunch of heavy industrial and contaminated land -- Ogden and South Hill do have TOD potential, especially South Hill which has less community around to oppose it -- then on to areas with brand new development.
It should get built because it's going to get a lot of use and because we need to switch to transit; unfortunately, until we can break either Council's reliance on developers or the development industry's reliance on sprawl, the TOD part is not a good reason.