It was, and it was a stupid idea which has fortunately gone away. The plan is for a combination of parking on site and (most probably electric) bus P&R, presumably from the existing M6 park and ride site which is I believe significantly underused. It's worth noting that this is very much a family attraction, and a family in a fully loaded average family car, ideally an EV, is an efficient use of roadspace and environmentally efficient, so there are no strong grounds to discourage this, though Morecambe doesn't have the same amount of spare land as Blackpool to give over to huge amounts of street parking.
With regard to the branch, I'd have it as a simple shuttle, but look to improve it to half-hourly clockface* with decent capacity stock, ideally battery (or wire it if it can just be strung off the WCML at low cost), I'd go for "Bay Metro" branding and livery the trains up with local pictures etc. If battery 230s are more reliable than diesel ones, it would have a good case for a couple of three-car sets of these with LU style standee interiors.
What I'd really love to see would be an electric tram from the P&R site through Green Ayre and the old line into Morecambe but the cost would be prohibitive.
* This might need to involve withdrawal of the Heysham extensions (though the line would remain for nuclear traffic), but I'm not sure that would be a great issue, a bus would do the job just fine. Or keep the Heyshams as well as occasional extensions of Bentham Line trains.
I do hope so. The regeneration potential of what is quite a poor town* is massive. You can tell how important it is seen locally - normally you'll get at least some NIMBYs for a project like this (and Lancaster/Morecambe have their fair share of NIMBYs, especially when it comes to student accommodation), but if you read the Lancaster press's FB pages you will not see *one single* objection.
* Blackpool is poor too, to be fair, but manages to muddle along on high volume, minimum wage type jobs supporting the Pleasure Beach and stag/hen do industry. Morecambe doesn't have that so does a fair bit worse.