The Outer Circle corridor is hundred-year old parkland and is not going to be used for an above-ground railway alignment (elevated or not) at any stage. It's not politically feasible. Your options are a rail over road viaduct or a big tunnel. No ifs, no buts.
The reservation remains in situ as it does in many places with the Rosstown Railway but I can assure you there would be a lot of upset people if they ever tried to put a railway back along that Malvern East reserve. And can you imagine the screaming masses of NIMBY's if they ever tried to use the Outer Circle reservations for railways again through East Kew and Carlton!
When I first noticed those spaces I thought "what great foresight to have such wonderful linear parks through the leafy east, I wonder if Hoddle planned that..." but it was only historical accident.