I think everyone is forgetting one economic truth that the CHS and RS ignored: Rod engines, especially the historically correct C&S engines are too small and light to economically operate this railroad. I don't think you can handle enough passengers - especially since they come in peaks during specific times of the day and days of the week/year with this type of equipment. The previous operator based his operations on geared engines (shays) which are much better suited to the weight limits, grades, and curvatures on this line.
The current operator could double head the small rod engines, but that nearly doubles the cost offering little economic leverage since steam engines don't M.U. like diesels. Perhaps they will put a diesel helper behind the steam engine with a controller in the cab like some railroads such as the Clinchfield did. But personally I think this detracts from the atmosphere.
I think the CHS's goals were laudable, but were not balanced with economic reality and that lead to not renewing the former operator's contract. In my opinion the only way to salvage this situation is to return to geared engines for the majority of the trains, and run one roundtrip a day or maybe even only on special days, or for special events at a premium fare with the historical equipment. This would provide an opportunity for living history, but not financially doom the commercial aspects of the operation. It would also be far less hard on the really aged historical equipment. Most of the public would not really care whether the trains were operated by C&S engines or shays. In fact using 12 and 111 is really not any more historically accurate than using shays, just economically worse! So clearly the CHS has had to bend - at least temporarily to operational reality. But hopefully, before they completely kill the operation, they will understand the economic reality of what they are trying to do.
Short of big diesels like the WPY uses, I don't think even a narrow gauge diesel can handle an economically feasible train size on the line - although the operating costs might be lower. I think this is what the Durango and Silverton determined as well. I do think the average public does know the difference between a diesel and a steam engine and diesels will not attract the same level of ridership.
Ironically, last week, before all this hit the fan, I received a post card from the CHS soliciting donations and support for the Georgetown Loop. They won't get money, just a letter telling them to clean up their act and face reality before they will see one penny from me.