Would any of the routes of the former rail lines that once served Newport be available for use or have these all now been totally obliterated by construction since the days of closure?
The old route from Ryde via Havenstreet is used by the steam railway as far as Wootton. Beyond there (over the old level crossing) the alignment is still clear through Binfield as far as Halberry Lane which is just under a kilometer from Medina Way where it crosses the river by the quay and has completely obliterated the old formation and station area. Beyond Halberry Lane, the right of way is largely clear of buildings but gets increasingly difficult with cuttings filled in, bridges removed and sections in use as residential car parking and access paths. Just before you get to the old tunnel beneath the main road there is a substantial new development (Beatrice Terrace) which blocks the alignment and is almost certainly impossible to divert around. All the previous obstacles might be fairly easily overcome at a price, but these new houses would certainly be very expensive and difficult to purchase and remove, which means that the nearest a commercial heavy railway station could practically get along the old route would be just before that, placing buffer stops around 400m from the Medina Way bridge, with access to the town via by the footpath through the old rail underpass, down to the quay, then under Medina Way.
With the more limited finances and political clout of a purely heritage operation I expect the steam railway might be able to make it as far as Halberry Lane if they so desired, an extension of around 2.5km from their current terminus.
An alternative rail alignment could diverge from the historic route and bridge the A3054 at Binfield then cross fields to follow the riverside footpath into a new terminal station near Newport Quay, this would pass right through the middle of the music festival site and a station could be included there serving the Medina school and leisure centre. Newport town centre would be a short largely traffic free level walk from the new Quay station, alongside the harbour and under the Medina way road bridge (buffers only about 150m walk from Medina Way Bridge).
Street running trams solutions could clearly leave the old rail alignment closer in as they approach the centre or use LRV turning and climbing capabilities to make more tortuous diversions around the housing obstacle whilst being able to cross and run alongside roads and pedestrian paths in this area without the full segregation of a traditional heavy rail solution. An automated street capable APM like my Ultra + Google robocar should be even more capable in this respect.
In any scenario I would like to see the steam railway survive and flourish, even if running alongside and on the same tracks for part of the way as any modernised and extended public railway service or alongside an innovative automated solution. I think with separate platforms at the termini and additional passing loops, steam could inter-run with non-electrified public services on the Ryde St John - Wootton section with DMUs extending on to Newport Quay station in one direction and on to Esplanade and Pier Head at Ryde. If an Ultra or similar APM network was developed, new parallel guideway could be constructed along the steam railway corridor, broadly following the same alignment, but with the vehicles' better climbing and curving capability able to route the guideway sufficiently far away, just the other side of the fence perhaps so to not spoil the historic railway atmosphere and experience.