The only issue I can think of with the current route is that they're limited to 2 trains at a time with the current route, and even then they have to stop when they're doing the Christmas show. If they're gonna have 5 trains in running order, why not expand it into the woods just enough that they could run 3 trains?
Why not? ROI. Return on investment. They won't gain anything by spending the money to expand the line. And to run extra engines/ trains increases the operations costs a lot (fuel, staffing, upkeep, etc.) without any increase in revenue. As much of a fan of the train as I am, it's not a ride that will attract more people to the park or pay at the gates.
The only time it's busy enough to need to run 2 trains is during Christmas. Technically there are a few days during summer where they, if they wanted, could maybe justify running 2, but they won't do it because of those increased costs, and the lines even then aren't that huge. There's no reason to run 3, expanded line or not, other than the coolness factor, which in this case isn't a good reason. :-)
Oh, the Davenport will likely never run again. While it looks pretty, it's not in running condition. And if it was running, it could only manage to pull one of the new cars, as heavy as they are. Not an ideal situation. I like that they have it out where people can see it again, but that's about as good as she's going to get now.