You pretty much nailed it.

For some greater detail: AAR regulations require that trains that run on lines which include freight traffic meet certain weight and crash standards. US freight cars have the highest standard axle loads in the world, so any train that runs where it can hit one must be able to withstand a head-on collision. The sole exception to the rule is when all freight traffic runs at a particular time when no passenger trains are running, with derails (a safeguard) in place to keep any freight from making it on to the tracks outside the window.

Caltrain runs on the old Southern Pacific line, which includes several on-line customers and a few branch lines. Due to the way the line is made, there is no way to have the required separation without significant upgrades.

Finally, stop-assist is now doable via GPS signals and other lineside equipment, removing the need for signalling upgrades. However, it also requires either lighter equipment or disc brakes on all cars along with equipment in the cab. Both are quite costly, and always require a homogenous fleet with the exact same door configuration.