I have spent some time up in this part of the world this week. I learned a few things.
1) Keswick seems to be doing very well. Most B&Bs, hotels etc seemed to be full or nearly so. The pubs and restaurants were busy. I acknowledge that it is the summer holidays, but Keswick didn't seem to be a town in need of regeneration; certainly not compared to many other towns in the north.
2) I checked a couple of the underbridges In Keswick. The steel superstructure has had it - hardly surprising given half a century of no maintenance. The masonry supports need some work but could probably be reused. They would need detailed examination of course. This indicates that the line is in the state you would expect, and will need some major work to rebuild.
3) the bus service on the corridor is excellent. Hourly bus up the A66 to Penrith. Bang on time, took about 40 minutes. £6.50. Reasonably well used - about half full for the 0855 departure from Keswick (which connects well with a Euston train). About half the punters were for Central Penrith, mostly pensioners. The rest of us went to the station. The bus diverted off the A66 for 3-4 stops and waited time at two of them. The journey could easily be done in 30 minutes non-stop, possibly less.
4) the bus service to Ambleside / Windermere / Kendal is also excellent. Brand new buses with wifi (which didn't work on my iPad) and USB chargers (which no one used), buses more than half full with a half hourly service, and a good number travelling Oxenholme - Windermere - Keswick. I met plenty of walkers on the fells whom were using the bus to get around. So there is clearly not a stigma about bus use in this part of the world.
So, whilst there would clearly be a market for a reopened line, even if it took everyone off the buses (which is unlikely) and then encouraged treble the number of people from other modes or growth, the market would struggle to fill an hourly 3 car DMU.
A more useful, and certainly better value improvement to public transport in the area would be to improve the bus service. Make it half hourly, and a genuine express non-stop from Penrith station to Keswick with a 25-30 minute journey time. In additional running costs, it would be about a quarter of that for providing an hourly train service. A better bus service would also be more convenient for most passengers than a reopened branch line. The interchange between train and bus at Penrith is as easy as train to train, and at Keswick the bus stop(s) is/are much more convenient for most of the town than the station could be. A half hourly bus frequency could offer decent connections at Penrith, that rail would struggle to do with an hourly branch service given the nature of the service on the WCML.
Whilst I would love more railway in this country, they need to have a purpose, and a key selling point that alternatives can't deliver. Given the lack of regeneration potential, the very good alternatives (with potential to be made better for relatively little cash), and the likely high cost of reinstatement, I'm afraid this line has a low chance of happening. Private investors just won't be interested.