I wrote before that mixed-traffic streetcars no longer make sense in this country, because whenever a corridor has enough walkable destinations to support the service, it attracts too many private cars. Those cars slow down the streetcar so much that it no longer provides enough value to draw passengers. There is a way to make them work, however: drive the cars away.
Drivers are currently drawn to Manhattan under today's heavy subsidy levels, but if the subsidies are decreased it will attract less drivers. Cordon pricing is the most obvious way to do this, but it could also be accomplished with high enough prices on parking or fuel.
Imagine Manhattan one day in the Future. As it did a century ago, a streetcar again connects Greenwich Village with Soho, Chinatown, Tribeca and the Financial District along Wooster Street and University Place. It runs smoothly and quickly, even at the height of rush hour or the hottest club time on Saturday night. The reason is that, thanks a combination of bridge tolls, parking pricing and ten dollar a gallon gas, nobody wants to be driving. There are cars on the streets, but never enough to slow down the trolley.
That's the kind of environment where a mixed-traffic streetcar can work. Without something to keep private cars out of the way, streetcars are just buses with a smoother ride.