I think it would be a mistake for West Medford trains to loop at Government Center. First, this prevents a direct connection to the Red and Silver lines. Second, the "core" downtown Green Line segment runs from Govt Ctr to Copley; not including direct service as far as Copley seems like a big mistake becuase it forces an additional and unnecessary transfer for many passengers going into Boston.
From the standpoint of track capacity and car fleet size, running two lines (Riverside/Govt Ctr and West Medford/Govt Ctr) is exactly identical to running a single through line (Riverside/West Medford). I'm assuming here that the trains on these two lines would have the same number of cars.
So the only argument I see for cutting this into two lines would be headway reliability. But since this entire line would be grade-separated (maybe except for one or two crossings north of the Mystic River? but I think the design would make those go away) this through-line, while LONG, wouldn't have the inherent variance seen on the B, C and E lines due to street crossings and traffic lights. So I'd think headways on a Riverside/West Medford line could be kept fairly reliable.
In practice, since the MBTA has historically run C and E farther north than B and D, it seems more likely that C/E would be the extended lines - E to Union Square (since that line needs car storage near the north end of the line, and I guess a car yard would stay near Lechmere?) and that puts C to West Medford. B's always chosen to loop first (presumably because it has the most headway unreliability), so I guess that stays at Government Center. D might be extended to North Station if they need extra capacity beyond Govt, which seems likely.
But I'd rather keep C at North Station, and extend D to West Medford, since that would put the whole grade-separated Green Line on one long route (excepting Union Sq, Prudential and Symphony stations, of course). That would be a neat line.
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