In many ways grades may not be all able to be eliminated but I would not like to see anything steeper than 1:75 for short sections especially once past Moss Vale. I would hope the Campbelltown - MV realignment could get a ruling grade to no more than 1:100 but that could be a big ask, although the Hume does not appear to be too steep once past Spaniards.

The likes of the Cullerin range, and some others may be a challenge but I would hope for tunnelling to go through them to keep the track straight and pretty much level.  There are challenges but as the two state capitals are vital then something needs to be done sooner rather than later.

Grades are not such a big issue now other than for freight, particularly with electrification.  Track curvature is the defining parameter as far as speed goes.

With the new Regional train fleet having bi-mode diesel-electric power, most of all curvature easing would be required within a 200km radius of Sydney, which is within the proposed limits of the long term extension of electrification to Nowra, Goulburn, Bathurst and Maitland.  I'd suggest that even grades of 1:60 with straighter alignments would be acceptable in the more challenging environments such as the Blue Mountains and Southern Highlands amongst others.

Modern diesels can basically not be an issue for freight services as things are now, yet the big issue for them is still the worm track over so much of the track especially North of Coota & Junee. I may be wrong but I have heard that modern intermodal type trains can run at 130Km/h which is good but how do they perform with long heavy loads around some of those tighter curves including Cullerin and other ones that are like a snake wriggling through the countryside?

Freight will benefit as much if not more than the Pax services with track realignment as well as grade reductions as a process during the newer
realignments
.  Having the initial phase of the Southern line done this way it should allow for up to 200Km/h for the pax services and perhaps up to 150k's for the intermodal freighters. Doing such work will benefit rail in more ways than just one area, and would help bring freight back onto rail for the Melbourne Sydney - Melbourne traffic also will help with passenger numbers in both directions.

While I see a lot of news about work being done in Victoria and Standard gauge conversions to improve the freight and pax services should they really bite the bullet and get the SG line to Albury fixed and upgraded, although that should be done under the ILR work but to what standard? Perhaps a rethink on keeping the BG between Melbourne and Albury might be a good advantage overall as well making it one standard of track for both systems.