It sounds like the stringer who wrote the article for the Gazette actually read the application, but if one is not familiar with the proposal, the article can give a misleading impression.
The purpose of the extension is to connect the currently unserved, and potentially future major stops of Pueblo and Colorado Springs with the current stop of La Junta so the Southwest Chief can continue its east- and westbound routes unimpeded. As such, it's a feeder line which would operate much as a connector bus line does for light rail or subway stations. Consequently, extending it past Colorado Springs and Pueblo isn't practical and would further complicate the service and linking.
The other task of the commission which is spearheading the study is to develop a proposal for north-south passenger rail service initially from Colorado Springs to Denver, with Pueblo service to follow shortly thereafter, and eventually, service to Cheyenne & Albuquerque. If that happens, it will provide a greater benefit and serve a greater population than simply extending a new spur north.
The Colorado Department Of Transportation [CDOT] is providing the technical and bureaucratic expertise to navigate the finer details of making the study happen as well as identifying possible future station locations and connection points with existing transportation options. They are not doing so because they are populated with railfans, but because they see the writing on the wall. The Interstate 25 corridor from Colorado Springs to Wellington (due north of Fort Collins) is already congested--and in some points, California-congested--and is expected to remain so after the completion of another lane north of Colorado Springs to Castle Rock and after a multi-year lane expansion from Castle Rock to north of Denver in the mid-2000s.
The current alternate is a state-owned bus service ("Bustang"), which is operated by several private contractors. Depending on the location and time of day, some of the buses already operate at capacity. This is really just a stop-gap measure, since the need to travel between points will only increase and even adding additional buses doesn't do much to alleviate highway congestion.
Of course nothing will happen until the study is completed and the results are in, but it's a first step to expanding passenger rail service to one of the fastest growing parts of the country.