Stjr, are they running streetcars and light rail on the same track in San Jose?
I believe this to be the case. Reading their transit map, it is not absolutely clear. However, I believe from the description I found below on their transit site about the historic trolleys, this must be as the this trolley apparently is only for special times and is classified as a "light rail" option. I have been along these tracks and I recall other, more substantial vehicles than these historic ones. This is backed up by other images I found as shown below.
After talking a look at google earth, this is the VTA light rail system. The images above are the downtown transit mall, which is a block wide loop.

Also, I am not sure the cars you think are parked aren't just "stop action" in the photo. Searching the web, it appears in other pictures of this system, that these could be travel lanes. I didn't see any parking meters or signs along the curbs either which would indicate the allowance of parking.
You are correct and I was wrong. There is no parallel parking along transit mall.

However, there are a series of pretty large surface parking lots. While the situation is different from our Bay Street, they've done a great job of shielding surface parking with heavy landscaping.




I think the main point here is that almost any combination of designs has been used somewhere and that these applications can serve as inspiration and guidance for what might work best for us. We should keep an open mind about all the options until more specific constraints or goals are determined.
I agree. However, at this point some goals and specific constraints have already been exposed. They include JTA's plan to one day run streetcars down Bay to the stadium area, JEDC's desire for medians on Bay and that we don't have the money in hand to construct an extensive rail system overnight.
Knowing this, now is the time to properly plan to help reduce the overall costs on something we clearly don't have the money for and aren't close to funding. A couple of ways to clearly save money are:
1. Reduce the amount of track necessary in a potential starter rail corridor.
Single, with passing sidings accomplishes the same thing initially as 100% double tracking. The major difference is one is cheaper, thus more affordable, making it more realistic to get something off the ground in the short term.
2. Integrate planning.
If JEDC wants to tear up the street for medians, at least make sure the streetscape plans are designed to easily accomodate rail, in the present or future. If placed in the median (if designed to be wide enough), it would reduce the cost of the rail project because it would not involve ripping up two miles of newly laid asphalt to lay in track, a couple of years later. In the event, we wanted to upgrade the line to light rail standards, track on it's own ROW (the median) would be more efficient than track shared with vehicular traffic.
3. Work with existing environment.
Transit malls can be great in the proper context. From being involved in the past with a development project on East Bay, all those little brick commercial buildings along that stretch need all the parallel parking they can get. In the future this may change, depending on what eventually happens with the courthouse property. With the future of the street's south side being an unknown, at least a row of parallel parking should remain in the short term. If any thing, all of this highlights the negative side of not having a coordinated long term vision in place. Because of this, its twice as hard to build synergy in the core with a mix of new and existing development.