I will echo Dutch on this that this is nothing more than politics. But lets dig deeper into this. Lets back track. Lets pick any Empire service train. It must travel down the west side into Penn station because unless they (the politicians) are planning on creating some new connection via MNR to Hell gate, all trains will have to go through Penn. And lets face it, without a stop in Penn Station, there is little demand east of there without discharging say a good 90% of its load at Penn. Then as mentioned, we would be looking at the same train set powered by a DM to transverse the same tracks that the LIRR already use, and I reckon that LIRR trains would get more of a priority, so it would be exposed to the same delays the LIRR encounter especially at the pedestrian speeds through Jamaica. Then lets train the crew to qualify on the LIRR territory unless the Amtrak train would be crewed by LIRR crew, perhaps even dictated by the LIRR unions who may not dig another RR in it's territory. Then, unless it's double ended, there has to be a place to turn the equipment around which we already know couldn't happen because two DMs are required, one on each end, therefore taking an extra DM from Amtrak's pool to cover a trip that is already being covered by the LIRR. Then lets look at the folks on Long Island who already claim that they pay too much to ride the LIRR. How do you think residents of LI, (Tax payers), feel about having NY state fund such a service yet neglect to upgrade the LIRR service? MY guess would be not at all too happy. The only way Amtrak service would ever make sense on LI would be if one of these bright politicians have the bright idea to build a tunnel or bridge under the Long Island Sound to connect CT or RI that would include a rail line in it. And even with this, you would have to do something about the west end connection through NYC, because the current layout of Penn won't yield any high speeds through it. Guess Guliani's once touted train tunnel connecting NJ to Brooklyn wouldn't have been a bad idea at all now that you think of it.
Getting back to the Empire service, wasn't really aware of this huge market that exists between Long Island and Albany. But if you look at the operations out of ISP, the most popular destinations are all in Florida and Southwest's numerous flights to BWI. Now if there were numerous flights to say ALB, SYR, ROC and BUF out of ISP, then I would argue that there is a big demand for Amtrak to look into. But for now, most folks will head to LGA or JFK and fly there, and those wishing to use Amtrak would take the LIRR into Penn and switch over, which coincidentally will take the same amount of time as say doing it on a thru Amtrak train service. The economics are just not there to sustain any service. Cannonball service is indeed jammed packed during the summer months, but wouldn't be much of an issue to add service if single track were to be given more sidings along the way, more equipment in the form of new bilevels, or the most logical of all, electrify the whole damn RR. Expensive some say? well, buying an orphan diesel fleet and bilevel cars that are not compatible with other RRs isn't very cost effective especially when you have to constantly maintain them. And having NY state fund a dead end Amtrak service wouldn't be too profitable either to serve Montauk that only generates high demand during the summer months. Just look at the off peak season counterpart of the cannon ball and see how many passengers ride that from Jamaica say during January thru April. Not much for Amtrak to take there.