Rails definitely do work well for the last mile in very developed cities (i.e. London), but it's probably an unsustainable infrastructure cost for most places. That being said, it's easy to just change where that last mile is in the future (i.e. mixed zoning, flexible working environments, increasing mega-cities etc...).
I don't think "very developed" and "unsustainable infrastructure" are mutually exclusive. I would argue the manner in which a city developed is far more important than the "degree" of development. Phoenix is a young, developed city but the efficacy of public transportation here is very different than London.
