Tunneling costs have nothing to do with the population size.

If NYC has 100x the population they would spend 1% as much per person for the same tunnel. At most the question is how much demand you would get and thus how large a tunnel you want. But even then you could simply build one, charge enough to pay for the next and keep going that way.

Size and complexity of tunnels increases as the population it serves does. Railroad tunnels have stricter grade and curve requirements than car tunnels, as well.

It is also already possible to get from NJ to NYC in a relatively reasonable amount of time, which makes the cost/benefit different than the Faroes turning things from half a day to minutes.

Demand is related to population size, but it's far from 1:1. Many people in NYC would have no reason to use this tunnel where presumably everyone on a small island would use it if it's replacing the existing ferry.

Further demand is also a revenue source, if 100,000 people per day to use a tunnel that's a much large revenue stream that's going to pay for a larger tunnel.

What population size directly provides is easier financing. NYC could for example build a tunnel without going into debt and then use the revenue from tolls for other things.

A tunnel under the Hudson certainly would not cost anything like €50,000 per inhabitant of the affected economic zone.

By the way, did I not mention that the proposal was for a railroad tunnel? Oh, yes, I did.