I trust some of the more electrical savvy folks will correct me if I share something that is incorrect... but here's how this layman understands it.
Runtime,
The SPDT toggles are used to set an empty block to the proper throttle beforethe train arrives in the block. It also allows you to park a train on a block (such as a siding) and power it down so you can bring other engines into play. So it does require you to do a little route planning, but you can also do this planning as trains are running.
The concern with crossing loops is burning or scorching the transformer winding coil by creating a short between the two or more throttle positions (taps) on a single transformer coil winding.
Not everyone agrees that using two throttles to run trains across isolated blocks is harmful. You can find several respected books on wiring Lionel layouts that talk about using throttle settings at different voltages to control the speed of trains as the cross blocks (such as one side climbing a hill and the other side descending a hill) - and they don't mention using SPDT switches.
It's not just the engine that conducts current. Lit cars with rollers on the bottom conduct current. When they straddle two isolated loops they basically act as a jumper cable between the two loops. If the cars have die-cast couplers (and each car is lit with rollers underneath) then it's one long jumper cable. If the cars have plastic couplers then each car is a separate jumper cable as the rollers on each car straddle the loops. These loops become tied together because the current flows through the cars.
As stated early, the concern with crossing loops is burning or scorching the transformer winding coil by creating a short between the two or more throttle positions (taps) on a single transformer coil winding.
The KW only uses one coil winding to vary the voltage for both throttles, and both of the throttles both move along this single winding. When the track loops are isolated you are drawing power off of independent "taps" (the position of the carbon rollers on the winding) on the transformer. The power is going to two distinct places (loops) and can not feed back upon itself. Throttle A can not over ride throttle B because the hot sides are isolated. The power for each tap returns to the transformer through the common ground binding post. It is two complete isolated circuits.
When you have a situation where a lit train straddles two loops being powered by two different throttles, then you have basically created a situation where you have connected both taps on the transformers winding together. This creates a short on the winding. It can create a hot spot and can burn the winding. Some people don't worry about this because they figure the length of time in which this happens isn't that long and the transformers are beefy and can handle it, but it is still taking place.
Think of it as having a fixed voltage multi tap transformer (an accessory transformer with multiple wires coming off of it). One wire generates 10 volts, another wire generates 14 volts, another generates 20 volts. You can use each of three of these wires to power three unique items that are insolated from each other. But if you take the 10 volt wire and wrap it together with the 20 volt wire using a wire nut and then plug it in, you will short out the transformer and ruin it.
Allowing a train to create a bridge across two loops powered by two transformers is basically doing the same thing as tying the wires on the transformer together with a wire nut.
The two ground binding posts on the KW (the "U" post) are already tied together inside the transformer. This is why they are often referred to as the "common" posts. The grounding buss bar in the circuit breaker/fuse box of houses is the same concept. You can have 30 independent circuits in the breaker/fuse box with hot wires going to 30 different isolated loops, but all the grounds come back to a common buss bar that the breakers snap into. Since they are a ground, connecting them together isn't damaging provided the circuits isolated on the hot side.
The common grounds just providing a return path for the amount of voltage set on the hot side.
I trust someone will tell me if I am doing something wrong but, I use a single common bus bar on my layout and connect the commons for my transformers, track, and accessories, to it.
