Apparently the railways runs uphill and then downhill through Cave Hill station, just before Lillydale. How about a tunnel through that big hill?
No comment on the rest.
This has been thrashed out previously, but there is no Cave Hill station. And the name of the station at the end of the line is Lilydale, not Lillyale. The name confusion has also been dealt with previously.
Why on earth would you want a tunnel, when the line could be duplicated for a fraction of the cost? The gradients are not a problem for today's EMUs, and the hill is not that big anyway.