The climatic effect of flooding Lake Eyre would apparently be negligible (there is another thread on here that discusses the matter).
A canal to the interior would make travel/transportation much quicker an easier.
There is a native plant called spinifex or salt bush that is salt tolerant (surprise, surprise) and that apparently makes good cattle fodder. The problem for large scale grazing in the area is water suitable for stock and human consumption.
1. Could you link to it? I did a search for the board and only found this thread. I'm pondering an AH scenario based on this that features flooding the Erye Depression as a megaproject done by Aussie "Will to Power" (and masses of Aboriginal and Indonesian slaves) and I'd like more information.
2. That'd be another reason to build it too.
3. If the Erye Depression were turned into an inland sea, I think the Murray and Darling would still flow into it. The area near the rivers wouldn't have the water problem.
Salt-bush plantations to feed Aussie cattle and export for cattle feeding elsewhere?