This line would be a good place for the Kingston Flyer steam train to go to.
From what I am gathering, the Kingston Flyer has a few nasty suprises waiting for its prospective new owner, notably issues around ownership of assets, IP, plus NZTA audits and paperwork. Also there are issues with maintenance, and how much it would cost to bring the locomotive and rolling stock up to an acceptable standard - while it would be good, it wont happen anytime soon.
On paper this looks good - it preserves the corridor, but
"...are currently working with the Rotorua District Council to assist them with their plans to continue the cycleway system in the District..."
could mean that they might lift part of the line. So the devil would definitely be in the detail.
But good on them for doing this. About 10 years ago, the Waitara Branch line was secured in a similar fashion (mind you it was purchased, not leased), and perhaps if Railmark (the company that wants to buy the Kingston Flyer) shows some insterest, then we could have some excitement.