I really like both the 2nd and 3rd versions. My only suggestion now on the 3rd version is to not make the two sidings in the top town symmetrical. It looks too contrived. Make one more straight and one more curved or something so they don't look like someone holding a mirror in the center.Several people suggested the same thing so I have a 3rd version now to check out. It has been interesting getting everyone's feedback on this project. My nephew saw the changes from version 1 to version 2 last night at Grandpa's house and really is getting excited. Lets see if this 3rd version is going to pass muster.
I think that looks great. Your Nephew will love it.
Ok, after reading the comments, here is version #6 to review. I think this is the best one yet...
Pacodutaco,
(Love the handle), The plan he likes, for a small layout, is actually one that just about anyone getting into the hobby, would love! It's versatile enough that it can teach operations to anyone trying to learn. It can "support" 2 trains, and probably the best of all and you may not have even considered this, but this layout can be built in Z, N, HO, On30, On3, and full blown O scale, (2 rail) and O gauge, (3 rail), with just minor adjustments needed for each scale for the plan to fit on an appropriate sized table.
I have shown this to my wife, and she wants it built for her N-scale trains. If you don't mind, I think that I'll borrow it!