What work would need doing to the route (other than stations obviously!)
At the moment the line is operated under a NST token system. I don't think there's a remote instrument for lock-in at Cowley. The line is not fitted with AWS.
The line is about 4 km from Kennington Junction to a notional station site at Cowley just before the factory at the Watlington Road bridge. A return trip should be able to make a round tour of the branch easily within a half hour cycle with a reasonable terminal layover. The manual token exchange system could be used subject to some associated changes to signalling:
A proper shut-in arrangement with remote token instrument at Cowley so a locomotive can be engaged in shunting activity within the factory sidings whilst a passenger train is running elsewhere on the branch.
Fitting of full AWS and TPWS at all signals, stop boards and distant warning boards
The main problem for passenger trains under that token scenario is the time consuming and archaic neccessity to make a stop in either direction to pick up and drop off tokens at Kennington Junction. The provision of additional remote instruments at Oxford station (like Worcester for single line to Evesham) would not be beneficial as that would add the running time to and from Oxford to the single line occupancy.
The main problem for freight trains under the token scenario is the high single line path utilisation by the passenger service, leaving no real capacity for freight during passenger running hours.
The solution is modern modular TCB signalling or it's ETCS successor using axle counters, together with a small track layout enhancement at Cowley. At Cowley the new platform would be built on a separate terminal track alongside a fully signalled freight reception/departure line connected thence into the factory sidings so freights can run quickly and easily during passenger terminal layover time. An additional signal block in each direction on the branch around the mid point could allow trains to follow each other fairly closely in the same direction along the single line.
An intermediate single platform station on the single line near Littlemore could be connected by foot and cycleways to both the village and the Science Park, also improving local pedestrian connectivity between the Science Park and surrounding settlements.
Here's a historical signalling notice showing the 1973 arrangements:
http://www.signallingnotices.org.uk/scans/280/1973 - LXO 132 Oxford Stage 2.pdf
I don't think much has changed at the Kennington end, but the signal box at Cowley was abolished subsequently along with the intermediate ground frame at Littlemore.
Oxford resignalling would be a great opportunity to convert the branch block system to something more modern than key tokens, even if not also carrying out the full track alterations at Cowley at the same time. Such a change could help streamline freight operations straight away without the passenger service, and the resignalling could passively provide for additional logical signal IDs, controller addresses, space on on the control screens etc. ready for subsequent changes to accommodate passenger trains. There may even be an opportunity for an interim hourly passenger service before those enhancements, the reduced service leaving some more substantial freight path slots during the day, which could be used more effectively without all the token faff.