The parallel road is not a full city block away as you might imagine. More like an ally but an actual road; the businesses have back entrances and there is foot traffic.

The congestion would not just be on that section of road, it would propogate out and cause major issues. The bikes are not going to experience congestion.

It should reduce the number of people driving. Sounds like a win.

In the gold standard countries for cycling, this sort of design is done on purpose. Pedestrians get the best route, followed by cyclists, and vehicles have what's left.

Elsewhere, doing the easy work to accommodate cycling, then ignoring anything that would cause even the slightest inconvenience to cars, is the norm.