This is an interesting conversation.
I think one thing being underestimated is how valuable a railroad would be if it went somewhere interesting. Any railroad. Even one with gaps and reliability issues. The advantage of rail over road transport is immense. Nearly as good as building a river between two points. In the century before the railroad, that's actually what happened. They were called canals. And the first railroads didn't rely on steam power. The carts were horse drawn and it was still ridiculously more efficient.
So, if you had a line that went somewhere interesting, there would be huge incentive to repair and maintain it. That's true even where you needed to move goods along the road or even ferries for some distance. A line from Norfolk moving inland toward Richmond and then Charlottesville or DC would be extremely valuable for Milgov.
As far as the PCs go, what's interesting about the railroad is that it's far easier to attack than defend. Commandos have the choice of location and defenders would need to control huge territories in order to keep the line safe. So, I think a raid would be a good adventure.
For a campaign, I'd have them reconing the route. "There used to be a line out that way. No one knows what condition it's in, but if we can make it usable, it will open up the whole state to reconstruction. We need you to find a way through, make contact with towns and groups along the way. And of course you'll be escorting these engineers and metallurgists. And watch out for the remains of the 301st which have been rumored to be out that way."
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