If steam is not cost effective in China, it is not cost effective anywhere. They have cheap labor and cheap coal, and they still switched to diesel.

Perhaps the question is not "Cost effectiveness" but how far the profits might be squeezed to realize a great cost effectiveness? Steam is labor intensive in terms of service and maintainence, but once all facilities are in place, with personnel and tools on hand to keep a piece of machinery going without squeezing the life's blood from it, does it then become a better proposition? In this, I am not talking about running locomoitves built in 1903, but modern, powerful, precisely engineered, steam power. I've often heard people say that if Pennsy's Q2 fleet had arrived five years earlier, we might have seen a whole different outcome in the steam-Diesel transition. The same is true for other superperlative steam power, such as NYC Niagara's and the Greenbriar.
But getting back to the point, could a large pair or trio of heavy, modern, fleet power locomotives make it as a service/tourist operation if managed to extract maximum interest, visitiation, and revenue? The Iowa state QJ's are a curiousity. They could direct us to a different way of thinking about steam operations.

If I understand you correctly, your point is that utilization recovers capitalization, the more the better. In general terms, leaving aside the cyclical maintenence / variability in consumption of utility in different components and systems, I'd certainly agree. I've never understood how these groups with mainline steam can afford to proceed at all with a few brief operating periods per year to cover all the costs involved. Funny money, in terms of donations provide restoration capital that doesn't need to be paid for in remunerative service must help, but even with that is it worth it? I don't think so, but a lot of guys working on them would disagree with me.

Perhaps the best of all possible worlds is a shortline with freight business that also runs tourist steam trains on the side. Given the fixed costs for the infrastructure, it may well be worth using steam for freight as a means of not only recpaturing capital, but to extend the tourist aspect into another market. I know I'd be interested in figuratively going back in time and running a peddler freight just like it was done in 1920, but how much I could pay for it is the question.

dave