I wouldn't even try to standard gauge the line, especially with the tunnels, curves, narrow ledges and bridges. Standard gauge passenger cars aren't exactly easily obtainable either. Unless there is 10,000 tons of freight to haul every day, there is no way you could ever recover your investment.
The answer is - to keep rebuilding the existing diesels. Potentially they could buy new ones - both NRE and MPI have built new 42" gauge diesel-electrics for export around 5 years ago. The MPI/Wabtec merger/spinoff/purchase of GE would give them access to the GE764 traction motor design for 36" gauge. They (and D&Sng) already build new passenger cars as needed. Maybe White Pass and D&S can agree on a common design and get new diesels at a little better deal?
Basically anything railroad costs 2-4 times would it should, just double that again for narrow gauge in North America.
Regardless of gauge, there is a finite capacity to any rail line. Having two monster cruise ships arrive about the same time and expect White Pass to give them all a few hour ride just isn't logistically or economically feasible. White Pass, regardless of owner, will have to continue to work with the cruise lines to coordinate available rail service with cruise ship line's desired arrival times. It will continue to be boom or bust day-by-day and with an off season.
My opinion..