I think this is a pretty solid idea, but for it to work several things must happen. A decent buy in from the land owners, with not just competitive, but blockbuster rates for the first 5 years (at least). Most of the properties are under-rented, or not rented at all it should be a simple matter of logic for them. With some rent (rather than none) and a successful business that will increase the marketability of their other properties would seem like a no-brainer.
Second, buy in from the businesses. Now is not exactly a time more businesses are going to be willing to expand, but if they are able to get block buster rates, the assurance of a big PR effort by the community, (SAMBA, SPAR, ect), it might create a buzz, even in a down economy.
Other land owners that need to be talked to are Cesery, as well as Valparo. 3rd and Main has some density now that 3rd and main is going in. With clustering at 1st and Main (Pearl and the possibly open Horne Building) 3rd and Main. Shanty and the Mediterranean food place opening at 6th and Main, and possibly the old Epicurean, Chans, and the small commercial building next to the detailers at 5th and Main, and then the existing buildings between 7th-8th.
Even without a streetcar plan, this kinda of simultaneous buy in would go a long way to helping with a successful plan.