The key to keeping the grade to 4% or even less on both sides of the pass, and keeping the railroad on the south facing slope is to stay out of the valley bottom as soon as possible and start climbing the north side of the valley before you get to Maysville. There are several side canyons that can be worked into, but also quite a few significant cuts and fills, but on the east side of the pass, the length of the line is 19 miles, with a gain of 3750' gives an average grade slightly less than 4% which means that a maximum of 4% is surely achievable. Coming down the west side is actually more difficult than climbing the east side. A railroad would have to stay above the present highway and work quite a ways up Tomichi creek before looping around and heading to Sargents. Just the same that line with its drop of 2600' can easily be 13 miles long and possibly even longer coming down the east side of the Tomichi creek valley giving an average grade of less than 4%.
I think that several people have touched on the snow issue, but Marshall Pass is 500' lower than Monarch, and once you get above 11,000 feet the snow issues are quite significant. The Mears toll road was certainly a factor, but the snow may have been an issue also.