development here will destroy thousands of acres of grade 1 agricultural land, is this necessarily beneficial?
It is agricultural land that EWR will be going through in some areas, it may not be grade 1 but it is agricultural. So I'm at a loss how you can use a broad brush statement (which is unhelpful,) without a little explanation.
As far as agricultural land more broadly is concerned, there would be an impact no matter where you built the railway because - funnily enough - the landward parts of Bedfordshire and Cambridgeshire are used for agriculture.
The line itself will take small strips of agricultural land (as will the A428 by the way) but it is not "thousands of acres". The impact of East West Rail on availability of agricultural land in this area is tiny compared to solar panels, where some of the best agricultural land there is, in the Fens between Waterbeach and Ely, has already been lost to solar panels. There is a "thousands of acres" proposal for loss of agricultural land near Newmarket which is also for solar panels. If you are worried about loss of agricultural land then you need to be looking elsewhere.
The housing developments will be mostly brown field, for example Tempsford and Stewartby. The expansion of Cambourne onto the old Bourn aerodrome is also brown field.
Given that this region is already overheating economically
The average first time house price in Cambridgeshire is £300,000 to £440,000 (in the city itself). Most mortgages are between 4 and 5 times your salary, so you would need even for the cheapest end, a £30,000 deposit and to be earning more than £40,000 a year - and that assumes you can get a decent interest rate so that you can actually afford the repayments. Building a very large amount of new houses would bring average prices back down, which is incredibly good for Cambridge to be recruiting young bright graduates for it's research and tech based industries.
You are right that the Cambridge economy is "running hot" and the tightness of the housing and labour markets are good indications of that. I'd like to know where in Cambridge there are houses for £300k. I read a National magazine which has what I call a "property porn" page, recently it featured an unexceptional Victorian 3 bed semi in Cambridge at £925k.
But anyone who has followed UK political and economic debate recently will know that the UK economy has a "growth problem". The UK can't afford to constrain economic development with high productivity employment that will boost UK economic growth and hence tax income. The fact is that growth is around Cambridge and Oxford, because they are Universities with global reputations.
East West Rail is about reaping the rewards of that growth, without further overheating of the Cambridge economy, by providing essential housing at suitable places nearby and transport infrastructure between where the houses will be and where the jobs will be. Everyone, all over the country, will benefit from East West Rail, because the economic growth that will be facilitated will give the Government a lot more tax income to spend on public services, or reduce tax rates.
Yes there are significant environmental and sustainability issues associated with increased development, and they need to be addressed with sensitivity, but they don't have a veto. What has happened with Cambridge South is a good small scale example of how that works, with an iterative process to minimise impact with compensation for the impacts that are unavoidable.