I think that if we were to follow that reasoning to the point of eliminating public transit, it would have to be eliminating all public transport subsidies: if all roads were toll roads and the tolls needed to cover the full cost of building and maintaining the roads, and there was no public parking, i think private mass transit would probably be successful.

(not that i think going that far would be a good idea. But it's important to realize just how much public money is spent maintaining infrastructure for private vehicles. eliminating free parking would be a very small portion of the subsidy.)

Well, if we did that in tandem with eliminating public roads we could see what happens. Public transportation does exist outside of the government-subsidized model; see the jitneys in New York for an example.

There is a lot of regulation preventing people from making their own public transport. Things like taxi medallions and a ban on dollar van lines.