DOn't take this as a flame, CR, but I'm not sure what direction your heading with the call to privatize. Where we do see some private enterprise, its in the likes of the MBCR's of the world, wherein equipment descisions are still made by the public agencies, and are just as subject to the political/bureaucratic process as anywhere else.
The example you cite, the PCC, was the product of private companies that were not under contract to public agencies, but were merely regulated. They had a freedom which a contractor does not have, however, they also were practicing a business model which is unsustainable under pressure from publically financed highways and roads.
Comparing the airline industry to the transit business is not an apt comparison in this case -- airlines (admittedly not all) can still make a profit because they do not have competition for the product they offer from another mode. Most airline flights are of a distance where driving takes much longer -- not the same competition faced by transit.
In short, the model you desccribed sounds only possible with sizeable government funding, which, with it, comes strings pulled by the political interests. Which brings us back to square one...the equipment designs aren't that great.