Newcastle Airport (Williamtown) is north of Newcastle, it's not on the way at all... what am I missing?
Williamtown airport is a tiny place (on the commercial side). It doesn't fit in with the strategy I was talking about, which is to offer connectivity from places like Canberra and Newcastle to the major international airports in Sydney. Williamtown could probably close to airline traffic entirely if there was a reasonable high speed rail connection to Sydney.
There have been credible plans put forward, but I agree they are very expensive and yes involve lots of tunnelling. You deleted the part of my post where I said, "if cost were no concern" - I'm aware that it would be prohibitively expensive.
Anyway off track but I just wanted to point out that a HSR rail station at an outlying airport like WSI is not actually a terrible idea in some markets, but I think the primary problem is simply lack of population outside of the Sydney basin to justify it.