2, Is there some reason that London - Hereford trains can't extend to Newport and west from there?
Certainly been done in the past. Not sure why it's not an option this time however.
Remember taking this photo a fair few years back...
I can remember when there were regular services run from Bristol - Hereford and beyond via the Severn Tunnel and Maindee East Curve avoiding a station stop at Newport. Also travelled the Maindee East Curve on Mystery Tours in the late 60's which ended up variously at Rhyl, Llandudno and Aberystwyth. Them were the days.