I don't think you can generalize like that - Canada (where both the Author and I live) has 4-5 LRT systems, with several more under construction [1]. The light rail in Calgary is the longest, it is not grade separated (it has intersections inside and outside the downtown area). I feel that it also works pretty well. Toronto has the St Clair streetcar and is building the Eglinton LRT, which is/will be partially separated, I also feel they are/will be an integral part of the network. The full separation of Ottawa's system is a big advantage, to be sure, but it is only possible because it is upgrading from a BRT which was also almost fully grade separated (otherwise, land acquisition costs would have been dramatically higher).
The grade separation of the O-train is incidental to the point I was making - an LRT can make a great core of a transit network, using frequent train service instead of route duplication in Bus/BRT service.
They are very popular. The suburbs they service are 20..30km away, and the dedicated roads make the long part of the trip very fast and comfortable. The far ends of the roads looks more like a train station, as they have large car parks surrounding them. Other cities in Australia now look on in envy.
There doesn't seem to be much chance of the buses being abandoned when the budget grows tight. A dedicated 2 lane mostly raised bus highway running parallel to a 8 lane highway isn't much use for anything besides buses, and they weren't cheap to build.