It's just dumb. For so many reasons. Yes, that guy could become incapacitated. He could also 'miss stuff' because he's focused on running a train and that 'extra pair of eyes' isn't there to notice other dangers. He could start losing his judgement, without someone to give him a reality check. And, that single guy will also start to cut corners more because no one is with him to keep him accountable. It will happen with a lot of them no matter how conscionable a person they might be. And to keep going, there's the benefit of crew members learning from being paired with more experienced guys, etc. (How is that one guy supposed to learn 'everything', as someone mentioned up thread, without working with other guys?)
It only takes one accident to wipe out the potential cost savings on years of operations for a small railroad (or a large one). Everyone who has already mentioned Lac Megantic is spot on.