The basic premise of narrow gauge railroading was doing it quick and on the cheap. Steep grades, tight corners, going straight through the eye of the storm, so to speak. The tunnel beat the pants off ox teams over the top ! But with all things, human nature tends to accept the current as something to be taken for granted and improved upon. The jones for the entire U.S. narrow gauge scene was that "improvement" meant "going large", thereby eliminating the very thing that made them special in the process.
The tunnel suffered from a few bad planning oversights and the limitations of its original point - down and dirty, ... get the #@! rails over the divide and get the ore out while the getting was good. When the traffic did not develop and the whole NG system lost momentum, no one was going to improve it beyond the immediate scope of getting trains through until such time as the point of diminishing returns was deemed to be crossed.
Reading the few stories as told by old South Parkers, working on the SP line was a job you loved to hate. Lower pay than other nearby roads, treacherous running, yet those who knew the job firsthand often wouldn't have it any other way. Like a badge of honor.