I think expansion of HR would've been extremely costly and seen numerous legal battles. The issue of more people and travel to the residential area would've been more of a concern.
The stadium was getting old and upkeep costs would've probably made it just as cost-effective to totally knock it down and build it from ground up. I guess that could've been done on a stand-by-stand basis over a number of years but would've reduced capacity and cost more than building the entire thing at once, but that would've required a temporary home.
With those massively over-ambitious plans and the desire to have income from out-of-season and non-matchdays plus the talk of World Cup/Euro's venue the HR site wouldn't have been suitable. And although things went wrong for us imagine if they'd gone right - like the Sheikh hadn't bought the fake Sky Blues but the True Sky Blues - even the Ricoh wouldn't be anywhere near big enough and we'd be talking about expansion. Who'd have thought Man U would need a 70k+ capacity stadium in the early 80's? Or Man City 15-20 years ago when they were in the equivalent of L1.