Dan - I wish I had the article - it has answers to most of your questions.
The change gauge was because the BCR and the White Pass were to have an actual interchange. Thus the need to standard gauge the White Pass.
Instead of being an isolated rail line, the White Pass would now be connected to the North American rail network and as such there would be a desire to have the ability to run freight cars from anywhere and to be able to load cars at mines and then ship them without transloading to a customer in North America via rail.
It made sense, but only if the BCR rail extension, the White Pass rail extension to Faro, and the planned for junction became a reality.