>I would assume any congestion alleviated would be offset by induced demand by the people who now see less congestion and decide its worth it to jump on the road.

Proportional to the number of people forgoing trips because the congestion sucks. You'll never eliminate all congestion at peak hours but you can make "peak hours" into "peak hour" if you make things more efficient. A more efficient system can also withstand more traffic before things start backing up into each other and it all goes to hell with feedback loops.

Scenarios where individuals are planning their own movement (road traffic, foot traffic in a stadium, etc) can generally be modeled like a plumbing system carrying a highly viscous and compressible material. If you throw every trick in the book at it to make all the "features" (intersections, doorways) efficient you can reap a lot of benefits without actually widening bottlenecks.