This is already possible on small isolated networks (I think there are a few heavy haul lines like this in Australia.)

The issue with networks is that it is impossible to roll out automation all at once, and the intermediate mixed automated/non-automated network is more complex and harder to do safely and reliably.

I understand your thinking but don't agree. Automation can indeed be rolled out, as long as it fits cleanly within the existing network. A fully automated train that follows the same rules as non-automated would easily work. The challenge is you can't realize the network fluidity benefits until much later, vs. an all-at-once rollout.

Ay, but there's the rub. It's challenging to do this well at the required level of reliability, and at a cheap enough cost to deploy at scale.

NYC has been moving to (theoretically automatable) CBTC signaling from mechanical signals. It's been challenging.

* The CBTC and mechanical interface has issues and constantly fails over the entire system

* The mechanical system is itself falling apart because it dates from the '30s, and is so old that the suppliers no longer exist and they source parts either from collectors on eBay or make it themselves, and this is also affecting the first bullet point

* Few modern suppliers of signaling actually sell fixed-block signaling that can handle the capacity required today, and even if they did, would it make sense to spend hundreds of millions or billions on a stopgap to CBTC, which will also cost hundreds of millions or billions?