I spent a very pleasant day in the mid-80s walking the railroad route, on the Santa Cruz County side of the hill from the UCSC campus to Glenwood if I remember right. Some of the lowest part had been converted into a paved and fenced bike path. A lower tunnel was a business records storage warehouse so we couldn't go in. Above the bike path, there was a long stretch where the rails were removed and it was for horses, joggers, and pedestrians. Above that was a section where the rails were still there. (Wasn't it an odd choice to leave rails in an upper portion of the track? Now there's no easy way to get them out.) At least one tunnel was open and we walked through. Eventually we got to a tunnel that was closed off, and scrambled up the embankment to a road that passed over the top of the tunnel, and even had occasional bus service. All the right of way was single-track, for two tracks all the tunnels and a lot of real estate would need to be acquired.
Even then there were discussions about reopening rail service, because CA 17 was so bad. However, the route is a good deal less direct, low grades being a higher priority than a direct route. The right of way was built for coal trains, not even diesel, so low speeds were a given and low grades a necessity. There are curves that would restrict the speed. And, as you say, the job centers in Silicon Valley are not easy to serve on a line. Someone commuting over restored railroad tracks would have a pretty bad time of it: bus or park and ride to a railroad stop, slow train over the hill, transfer to light rail, transfer again to a county or employer bus. Sorry to say it, but running frequent express bus service would probably be a better use of funds to reduce commuter traffic over 17.