The remaining line through the city has to be at-grade.  Just move the bike lane on King Street to a less invasive street like Young, and put the tracks in the current bike lane.  (Or rail could offer free rides to bikers on King.)  Yes, it will still take up space on King, but at least you can SEE the train coming as opposed to little bikes, and the lane is already taken at the moment.  Plus, if it is on King Street, then the rail is taking people directly into the heart of the city meaning fewer or no buses needed, and you won't have to build any huge hulking rail stations.  Just put stops along the street.  The rail would still have to follow street lights, but with it's own dedicated lane, there should be no traffic back up.  That way, you might even have extra money (What am I thinking?) to make it at-grade all the way to UH (King-University intersection).  I'm not and never have been a fan of rail, but if we're going to do this anyway, then make it as cost effective as possible!