Steve,
Since we're way off the subject of narrow gauge here, I'll make this my last answer.
Yours idea has been bandied about before. Here are some of the problems.
First, the matter of the quality of work that has been done. The 1522 seems to have a problen keeping their bearings cool on long trips. It's a nice locomotive but we'll let the BN worry about them. The Cotton Belt Loco is a shoestring operation, listen to the rods and pins when it goes bye. Doyle MacCormack (4449) is probably the best out there, but even he can't budge the UP management, so he has been running on the Willamette Pacific and has been contacted by the BNSF, probably after the 1522 debacles.
Second, UP figures that in case of a breakdown, the cost to have their main line blocked is $1,000,000 an hour. THis could bankrupt most of these operators.
Third, Licensing. Even if these people are licensed (which many aren't), they still are not employees of the UP, and therefore not subject to the way that UP wants things run.
Fourth, Yes, there are many organizations that Steam Crew Members belong to other than the Steam Crew. I used to be on the BOD of a C&S society, but do I want to see the 638 or 641 running on the UP main? Not on your life. Many of the UP Steam Crew members have disassociated themselves with these other groups, mainly because of the problems which you have brought up. The nagging of "Well you work for UP, why don't you..." or some of the shennagains of these groups.
Fifth. The UP doesn't have to keep any steam locomotives in operation or E-units or DD-40's or passenger equipment. They are not compelled by any force other than the fact that many of them are closet railfans, too. So be grateful for what you have.
As for the others, there are many short lines and commuter districts which are the same gauge. Since the UP is out, why don't they explore the alternatives?
As for your question about the 838. It is a giant paperweight. It has been cannibalized to a point where it will never run again.
(It would need Rods, Cylinders, Boiler, springs, hangers) It would be cheaper to jack up the whistle (if it still exists) and drive a new locomotive under it.
Rick