Doesn't work. In Graz Austria one of the lines goes where most traffic is. They cannot change that because it's the only road and people need it. There is not enough space to move the tram away. End result: at 5 when everybody leaves work, the tram takes 30 minutes for something that would otherwise take 5. It's also overcrowded with students at that time because there are not enough trams going as there is not enough space.
They either need to remove the cars or build a subway, there is not much alternative.
A long tram, such as Edinburgh's, can carry about 250, and will be slower due to street traffic, junctions, and more frequent stops.
But most tube stations are only around 10 minutes walk apart, so it's not often necessary to use both in most of the busier areas.
I love light rail, but it takes much more of an investment. If people would be fined for blocking buses, it might make it a better alternative.
EDIT: The other comment here is right, a bus line won't compete with trains for capacity.
I used it in Lima and was pretty impressed about its efficiency.
The two tram routes which have been cut in the last 50 years were both shared-right-of-way and there's only one short piece left.
Overall I like trams much better than subways. There are tram stops every 200 meters, you can hop on and off, you get to see the city instead of a concrete tunnel, and you don't need to drag your kid stroller up and down the fucking stairs.
Cars, on the other hand, suck. It's one thing to have a city with a million people, but it's quite another thing to have a city with a million cars. Suddenly the whole place is paved over, the air is disgusting, and you can't walk anywhere anymore. Sense of freedom, my ass. It's great that Switzerland makes owning and parking a car so expensive.