Well said!
The feasibility of tunneling depends on map-scale. In Metra mode, a whole system should be possible underground. On a continental map, tunneling under even one square (six miles) would represent one of the longest tunnels in the US.
If the game did have tunnels, then I'd allow only electric track and locomotives. While some steam and diesels can / do use tunnels, there are many places (e.g. under Manhattan and the Hudson) where heat and fumes caused so many problems that electrification came quickly.
I'm not sure that max train length needs to be explicit. Loco strength vs cargo weight alone effectively limits length already.