As far as the grade crossing issue is concerned, that's technologically fixable. Many light rail lines now have complete train-based control of junctions and grade crossings without track circuits except as backup - they use radio links to wayside boxes either directly or via an inductive arrangement similar to a traffic signal loop at stations and other control points. A Hi-Rail bus could do something like that fairly easily, though the wayside gear would probably be almost as expensive as fixing all the track circuits.