I agree I think spending a fortune on a diversionary route is on the basis that it helps to reopen Okehampton and Tavistock is crazy. Okehampton and Tavistock should be irrelavant to the argument, the solution should be a Dawlish diversion which fixes the problem once and for all and serves Torbay which I suggest is more important to the economy of Devon than Okehampton and Tavistock, If these locations justify a train service then it should be done on thier own merit. I would also agree that upgrading Yeovil Exeter should be a high priority as well.
In my view the Okehampton route would only be justified if it became the main route to Plymouth and Cornwall, but that would push the costs substancially and still wouldn't serve Torbay.
It depends on how much help it provides to the reopening and how much a Dawlish Avoiding Line (DAL) costs. Also the reopening doesn't mean that the DAL will not be built at a later date, nor does the DAL mean that the reopening can't happen.
Yes the reopening needs to be done on its own merit, but so should the DAL and if neither are justified in their own right then it will come down to whichever one is the cheapest to "fund" to provide an alternative route.
Therefore the reopening isn't irrelevant to the argument (it may not provide the best route when compared to the DAL) however if it is the choice between not doing anything (as the BCR is way too low for the DAL) or reopening through Okehampton then clearly the preference should be for the reopening.
Yes the reopening shouldn't be done, just because it doesn't cost as much, is likely to be able to be built faster and there would be some kudos in reopening a long closed line. However nor should the DAL be built just because it is the better long term option (and most people saying positive things for the reopening would agree that it is the best long term option). Note that a better long term option doesn't mean that it is viable for sometime to come, as it may only really start to come into its own if it is coupled with other time saving infrastructure projects.
One possible problem with a DAL is that we may run out of paths at other points on the network. For instance with the DAL there maybe a need for 3tph between Exeter and Plymouth (1 or more to/from London, 1 XC and 1 local stopper) which may then mean that there are insignificant paths through Exeter St Davids for any other future services (e.g. 2tph to Waterloo, extra branch line services, or even hourly services to Okehampton), meaning that building the DAL could scupper other rail improvements which could have just as much justification in the future but wouldn't be able to fund works to provide more paths at Exeter.
Upgrading of Yeovil to Exeter is something that a lot of people would like to see and as I've pointed out before the reopening could (although there is no certainty and it depends on lots of things) actually make the case for such works to be done a lot stronger.
Just because one project (in this case the reopening through Okehampton) doesn't key in with some peoples ideas of the best use of resources for an area doesn't mean that it is not the best solution for the time being. Likewise just because it reopens a line closed by Beaching it also doesn't mean that it is the best use of resources for an area.