Fritz,
I based my post on discussions I had some years back with the late Jim Ozment, whose position in the D&RGW gave him a lot of inside information. His conversation indicated that a lot of scrap rail was indeed used on the rebuild on the Silverton Branch. How the accounting was done between the railroad and the scrapper may not have reflected that, however.
I give the D&RGW a lot of credit for getting the Branch repaired over the 1970-1971 winter. I rode the line in 1971 and there was plenty of evidence of the repair work up in the canyon.
There were some places between Tefft and Needleton that were problematic for years after that, though. I remember riding early in the season in 1973 or 1974. I was riding in the rear open gondola. I noticed something unusual going on up around the locomotive drivers at one spot, but couldn't figure out what it was. When the car I was riding passed over the spot, I saw: the track had sunk about 2 feet or more in the mud when the train rolled over it! What I had seen flying around up at the locomotive was mud being thrown in the air by the counterweights on the drivers! The trucks of the passenger cars were over half submerged in mud as they went over the soft spot, which was well over a couple of hundred feet long. After the train had passed the "soft spot" by around 100', the track gurgled back up out of the mud. I was amazed that we didn't derail. When we got to Silverton, the locomotive and train were quite a sight--mud covering the counterweights on the locomotive drivers, mud covering the tender and passenger car trucks. What a mess. By the way, the track patrol speeder didn't have much trouble in the bad spot because it was light enough not to "sink" the track. Going back in the afternoon, the whole process repeated. Fortunately, it was at the first of the season with only one train per day. I assume the MOW people did something there to shore things up, but I remember seeing maintenance equipment at that spot for years in the 1970's. I was told by one of the "old-head" conductors that the 1970 flood had changed the river course there, causing water to "sub" under the grade.