I doesn't matter what type of urban rail system you build, you have to have a facility to store and maintain them. It appears the preferred site of the maintenance barn will be at First St. and Barton Springs Rd. This means the first phase of the urban rail project will have to cross the Colorado into south Austin. Yet, the urban rail line to Austin-Bergstrom isn't planned to be the first line constructed?
Whether they decide to refurbish the Congress bridge or build a brand new one, it's not going to be cheap. Seems foolish to spend all that money on the first phase to cross the Colorado for a token presence in south Austin.
Look at Honolulu's light rail plan, they're building it in phases too, from downtown Honolulu to its western suburbs. The first phase to be built is in the western suburbs, because that's where they can find sufficient space for their maintenance yard. Looks like Austin is faced with the same dilemma, having to build their first phase of urban rail beyond downtown Austin.
http://www.honolulutransit.org/
Apparently most of Austin's inner city streets lack sufficient lanes to lose lanes for urban rail, just like Honolulu. Therefore an at-grade alignment sharing of lanes seems likely. But Honolulu solved that problem by elevating their rails above city streets. If that solution is too expensive for Austin, they should look at what DART did in downtown Dallas; having rail, bikes, and pedestrians take over a single city street by building a streetmall. Of course, you wouldn't want to lose Congress to a streetmall, but what about a neighboring city street through the center of the city?
Realize that once the decision is made to share lanes in city streets that your trains will never be faster than existing buses in that corridor. You will not be getting "rapid" transit. You'll have "slow" transit, which is fine for circulators and short distances, but not for further distances reaching far beyond downtown Austin, like to the airport.
I suppose if we look around the country, we can find examples of a mixed rail system where trams share lanes only on downtown streets and run in dedicated lanes or dedicated corridors after leaving downtown. I believe this sort of operation could work in Austin. Even Detroit is considering this type of operation along Woodward. But I would want to keep operations in share lanes as little as practical. 50% in share lanes of a completed system is far too much.