*rant warning*

What you're seeing is a practical and economic necessity.

1) Freight lines only run where there's freight to haul. In the modern economy in major urban areas that are not still heavily involved with heavy industry, trucks simply work better. Wagons then trucks were the original local switcher, and as they've become more capable they have taken over most of the functions of the local freight train. At the same time, businesses and industry have changed so they don't need and can't handle the kind of bulk services that a railroad is designed for. So a line that only has a customer or 2 is always at risk of removal. Also remember, the railroad for pays taxes and upkeep on its r/w and improvements from what businesses pay for the service - if a line doesn't produce much revenue it's not worth keeping.

2) Passenger trains in the US are a problem for mixing with freight even if FRA doesn't make an issue. Unlike Europe, we actually do haul a lot of freight on rail, and do it in a cost-effective manner (i.e. not very fast, except for some intermodals). We have a lot of long, moderate-speed trains, not a few short, fast ones. So for dispatching purposes a little 6-car Amtrak train running 75 mph takes up as much space as an intermodal. At 90 it's more like a long bulk train. It doesn't take many passenger trains to mess up the way the railroad runs, even without getting into "higher speed" territory. Throw in the kind of frequent schedules a passenger service really needs to carry a significant load (and maybe even cover costs?) and you bring a freight railroad to its knees. That's why you have limited passenger service, high costs for capacity improvement (double or more track where it's not needed for freight), or long windows (usually at night) in passenger service for the major freight work to happen.

3) Comparisons between interurban lines and HSR, BART, or other modern passenger services are invalid. PE and most interurbans normally ran at 35-40 mph tops with a very few lines where they might reach 60. Yes I know about North Shore - but there weren't many of those. The passenger trains weren't much shorter than the freights, and the systems were built with lots of excess track capacity for freights to hide. Even modern light rail systems routinely run faster than most interurbans ever did.

While I also think that we will eventually regret removing so much rail capacity, in town and otherwise, it's sometimes necessary if we also want vastly improved transit or even (shudder) HSR. BTW, BART wasn't designed for 140mph - it was designed for 80-85, and did run at 80 in the Tube and a few other spots until it became clear that the maintenance and power expense for doing that was too great. They can still maintain pretty good schedules at 70, and it costs a lot less to maintain and power the system at that speed. Note that many airlines do the same thing when fuel prices increase - slow down a little bit, makes a couple-few minutes difference in the schedule (which gets lost in the TSA time) but saves a lot of gas.

/rant

-m