The Riesling trail does bring a lot of tourists to the area with far less work than a heritage railway.
The Rattler Rail Trail (Riverton to Auburn) and Riesling Trail (Auburn to Barinia) could do with getting a link south from Riverton and then a refurbishment of the original 1990s sections of the path before touching anything north of Riverton in the Peterborough direction.
If it could be joined all the way to Roseworthy (eventually to be met by a 3000 class Gawler-Roseworthy shuttle?) you would have quite an attractive multi-day touring option.
One more complete route would be better than two one-buttock solutions, no?
My suggestion is to fill between the rails, spraying tar on them first to preserve them, and make the route a cycle way. This way the route and rails, at least, are preserved if someday a "Heritage Lottery" is established in Australia and dreams can become realities.
Covering over rails with tar might work in some countries with colder climates, but not in South Australia. I know of a cycling group in the south which runs a sweep on when the old rails on the Coast to Vines bikeway at the Pedlar Road crossing will get exposed after each time the council sprays over the top.
You need a greater width than just filling in between the rails too, as 1.6m is not wide enough. Austroads standards dictate that a shared path where high speeds (i.e. over 20km/h) are expected has a minimum width of 3.0m, and a recreational path where you're likely to see people walking/riding in groups has a minimum width of 3.5m.
Rather than the expensive effort of building out a wider deck at rail height to incorporate the 3.5m path and shoulders or barriers on each side, better to remove the track and build the path at a lower level. In addition to allowing the recovery and reuse of the rails, this would preserve a cleaner corridor for the event that there is one day a realistic proposal for a new railway using the same route.