That always struck me as specious bureaucratic logic. Does the average driver even understand the difference between a blue interstate and a green interstate?
Some average drivers may understand what an Interstate business loop (or spur) is when its used properly on an actual surface street, but when used improperly on a limited access highway its confusing. I'm sure people don't understand that the BL-80 designation is used because its a quasi-interstate. You have two freeways/expressways marked as some form of "route 80" that's just dumb if you ask me.
Is BL-80 noticeably worse than numerous other urban Interstates that don't meet modern standards? Would there be any actual problems cause by giving it a I route number?
You're right in saying that there are plenty of old urban interstate highways that don't meet modern interstate standards. The Schuylkill Expressway in Philadelphia is a great example of a substandard urban interstate. The Schuylkill is I-76 between Valley Forge Interchange and the Walt Whitman Bridge. The "Surekill Expressway" is an engineering nightmare that falls short of interstate standards all over the place. However, there isn't much PENNDOT can do to fix this problem; Interstate 76 has to make its way through Philadelphia and over to South Jersey somehow and there are no practical alternatives.
It WAS a signed Interstate from 1964 to 1982, so obviously it was "good enough" at one point in time.
It may have been "good enough" in the early 1960s, but its not anymore, which is why I would not give the SR-51 portion of the Capitol City Freeway an interstate number. Just because the same sin is committed elsewhere doesn't make it OK in Sacramento.
...giving it a I route number?
Be careful what you wish for here. Caltrans would probably make it I-305, not I-480 because I-305 is already "sort of" there. Most of us roadgeeks would find this very irritating.
The narrow portion of unsigned route 51 from E Street north to I-80/unsigned Route 244 in Foothill Farms represents the segment built as US 99E (and partially US 40) in the late 1940s/early 1950s, which would've been bypassed by the canceled realignment.
This is why my solution to the problem would be to simply mark it as a California State Route. It could either be signed as SR 51 or in the future SR 9 might make sense if the Interstate 9 thing ever happens. Also, as I said earlier there are clearly two separate highways here. The true East/West portion that is US 50 and the North/South portion (marked as East/West BL 80) that is really SR 51.