While I aggree wholeheartedly with your observations, I think replacing the steam with diesels would have been a greater challenge. You state the #50 was equal to a C class and a GE 45 tonner is equal to a C25. Perhaps in tractive effort, but not in horsepower. I saw the #50 work in Durango, it had a real workout turning the Silverton consists on the loop. They'd make a run at the hill down by Gradens Mill (where the Red Lion Inn is now) and barely make it over the top at the water tank. I saw it make 3 trys to shove 3 loaded gons up the backside of the coal tipple. The first two resulted in it sliding backwards down the ramp. The USA 3000 was supposed to equal a K28 but when it latched on the a 70 car pipe empty drag in Farmington, the crew got eaten by the hogs at Aztec. C&TS 19 has 21000lbs of TE, but I will bet good money that the 361 could do better than 4 mph on a 4% grade with 3 loads. The point being TE and horsepower in regards to steam and diesel do not equate well.
Another problem is altitude. WP&Y never goes above 3000'. An 1100hp locomotive is still making close to that at 3000' The D&RGW never got below 5000' and most was above 6000' and the steepest grades were all above 8000' Diesel locomotive technology in the 50's was such that high alitude operation was poor - that is why steam held on in Leadville on the C&S into the 60's.
Another factor leading to the demise of the NG is the one-way nature of the carloadings. Whether it was eastbound Crested Butte coal or westbound San Juan Basin gas pipe, it was a loaded train one way, empties the other way. It takes $$$ to move those empty cars around, it always seems there is a nice 4% hill in the way somewhere.