Obviously you properly know the area Krus. Do you have any thoughts on the line being restored?
I do indeed know the line and the area. Efforts to get some services restored go all the way back to the 80s, and were almost achieved in the 90s (but the distraction of privatising the railways got in the way). The long delays, and the decay of the track(bed) in the meantime have made things much more expensive.
Let me start with an overview of the current state of affairs.
Much of Anglesey's workforce commutes off the island for work, which makes for heavy road traffic over the bridges, especially over the Britannia Bridge in the morning, as four lanes merge to one within half a mile. Plans for a third bridge to ease issues has just been put on the back burner due to a WG re-evaluation of all road-building schemes.
Not many people commute off the island by rail: the railway takes the easy route along the south of the island, but it's also avoiding population areas. Discounting Holyhead itself, only two of the other stops serve sizable population areas: Valley and Llanfairpwll. The others are effectively rural halts.
Neither Valley nor Llanfairpwll seem to be used as railheads. Their sparse service (1tp2h plus some extras) doesn't tempt people out of their cars, and most Anglesey residents who intend to make a long distance rail journey will make their way to Bangor instead - adding to road traffic on the bridges.
Now let's drift back to the Anglesey Central line. Llangefni is by far the largest population centre on the route: it is the civic centre of the island, largest town other than Holyhead, has a sizeable industrial estate on the south side of town (near the railway's approach to the town), as well as a FE/HE college that sees people commute from many areas of Anglesey and Gwynedd.
After Llangefni, the major population centres are Llanerchymedd and Amlwch, but they're significantly smaller (1,500 and 3,500 compared to Llangefni's 5000), and a lot further away from the mainline. They don't have employment centres on Llangefni's scale either, though Amlwch is trying to enhance it's tourism draw with it's history of copper mining, and Llanerchymedd station is, as mentioned, now doing nice service as a community café.
Rebuilding Gaerwen to Llangefni would mean rebuilding four miles of track, plus the junction work at Gaerwen. Llanerchymedd would be another seven miles for limited additional traffic, and Amlwch is another seven miles down the line.
Another significant expense would be the replacement of the destroyed bridge over Glanhwfa Road, just before Llangefni station.
My solution would be to reopen Gaerwen to Llangefni as a mainline branch, with a new station some distance south of Glanhwfa Road. (Ironically this is where Llangefni's initial temporary station was, before the bridge and subsequent cutting was finished.) I'd aim to site the station on the current line roughly opposite Lon Ceunant: just after the Glanbia Cheese factory (or whatever it's name is now), and just before the rugby club. This would be a short walk from the centre of town, but also very convenient for the industrial estate. Road access from the south to a significant car park could make Llangefni serve as a railhead for much of central and northern Anglesey, with a proper hourly service through to Bangor and beyond, calling at Llanfairpwll, and possibly another station near Pentr Berw. Probably not Gaerwen itself, though: the station is in Lower Gaerwen, whereas most of the houses are on the A5 in Upper Gaerwen.
You may notice that I've not said much about the heritage operation yet. The Lein Amlwch campaign team have worked hard to keep this line in the public and local government's mind for several decades. I do agree with the above concern about the significant heritage competition on the mainland: five narrow gauge , one standard gauge tourist railway, plus a tramway in northern Snowdonia alone, by my count. They do, however, have a well-established presence at Llanerchymedd, which could be a reasonable place to start the reconstruction of a heritage line, while limiting initial expenditure. I know several members of the group, and wish them the very best in their endeavour, but I would see more benefit in the mainline connection.
If they started building at Llanerchymedd, there would be the question of which way to construct the railway, though. North toward Amlwch, or south toward Llangefni? Amlwch's station buildings were demolished when the A5025 was widened for (original) Wylfa construction traffic, so a terminus there would be a clean slate. Llangefni's station is still owned by the council (and rented out as a dwelling), and the large station yard has been a public car park for many years - great for visitor access. The trouble would be the multitude of bridges through the Dingle / Nant y Pandy nature reserve just north of the station: they would need to be inspected and repaired before you could run a service to/from the station.
In summary, Llangefni's existing station would be a great eventual terminus for the Lein Amlwch heritage railway, but it'd be a very expensive place to start, what with all the bridges and cuttings nearby. Llanerchymedd and Amlwch would offer easier starting points, for a nascent railway. I'd take the demolished bridge in Llangefni to be a line of demarcation for the line, and advocate the Gaerwen-Llangefni portion be reconnected to the mainline, as this could be of more direct benefit to local residents as a whole, in giving a significant option to reduce car useage for travel to the mainland.