This never would have happened, multiple reasons.

The movie is full of unrealistic stuff. But that's why it's a movie. As far as your first set of reasons, and these are in relation to the CSX 8888 incident, which this movie is loosely based on (http://en.wikipedia.org/wiki/CSX_8888_incident; also, note the Reference URLs at the bottom of the Wikipedia entry):

1st #1) The independent brakes were set, which automatically deactivated the the alerter system (dead man's switch). Also, independents alone won't stop a train with that many cars. They would soon be completely worn out with the throttle at its full setting, but that wouldn't have reenabled the alerter. I can't remember the exact dialog, but they alluded to the deactivation of the dead man's switch with the engagement of the independents. This is exactly what happened in the case of CSX 8888.

1st #2) We never know what the maximum speed of 777 was. We could infer an approximate speed from the speed when they were catching-up and with both attempts to slow the train down. With the catching up, the speed of the pursuing train manned by Washington and Pine's characters would have to be higher, so it wouldn't match the runaway's speed. And during the slowing down attempts, we see the speed only from the manned locomotive after some sort of contact has been made. So naturally the runaway train would be slowed down (at least temporarily). Otherwise the only way they could gauge speed would be to exactly match it (best done with the helicopters reporting ground speed, if they have the means to measure it). If they were reporting speed from the dispatch control, it would be average speed over covered distance, and that would likely be lower. My point is though the movie never makes clear what the top speed was and if the overspeed limiter/governor/controller ever engaged because the critical speed was reached. I think the exact speed is dependent on the model of locomotive and its diesel powerplant, so we can't assume that one speed is the critical speed for all locomotives in general. Indeed the most important feature for the overspeed is to limit the diesel's RPMs, and the diesel powerplant may never have reached that critical RPM, regardless of the trains speed. In the case of 8888, according to the Wikipedia entry, it reached only 51 mph (it was when they coupled with it, according Reference #4). But According to the CNN article (Reference #2), 8888 averaged only 30-35 mph and the maximum speed they indicated was 47 mph. Regardless, it wasn't enough to reach the overspeed limit.

#3) I agree with you about this. They left this to "Movie Magic" and hoped that the viewer wouldn't be smart enough to question it. My guess is that they were trying to show that Dewey didn't move the lever into the proper detent and that lever itself doesn't have enough friction to keep from moving down on its own from gravity. In the case of 8888, the engineer really did have the throttle at 100% (necessary for maximum dynamic braking) but he failed to in any way properly engage the dynamic brakes lever to the correct setting from the get-go—with no magic movement by any levers on their own. I can't remember the scene exactly, but I'm assuming that the lever that moves in the movie is for the dynamic brakes, since Dewey later admits to Rosario Dawson's character that he had the throttle at its full setting for dynamic braking. So I wonder why they just didn't figure out how to depict Dewey failing to apply for the dynamic braking properly from the start, and had to conjure up the magical moving lever instead. My guess is that the average movie viewer wouldn't catch on to the way it happened in reality, and that they need to see something physically go awry in order to understand that something bad is happening.

2nd #2) The way they slowed down the train and eventually stopped it is pretty much the way they stopped CSX 8888 (see the Wikipedia entry). In the case of CSX 8888, they got the train slowed down enough—11 mph—that a worker was able to run alongside (no leaping from a pickup bed) and then climb aboard the unmanned locomotive. Also with 8888, they did try a portable derailer (similar results as in the movie) and firing bullets at the fuel cutoff (which wouldn't have worked it they had hit it, because it requires being pressed for a certain amount of time for it to work).

Peace, Love, and

You know why is also wouldn't have happened like that?

Because it's a movie.

yeah yeah yeah we know. But even "if" a chain of stupid events happened, it wasn't too bad until Denzel started driving a train 70 MPH in reverse, and sheriffs started shooting shotguns at the train. That's when I started laughing. But as far as being "Speed" only with a train, it is but a little more plausible. As soon as I saw a marine just home from a tour in Afghanistan, I was like, "yep, that guys gonna die."

well it did happen. no more to add.

That's why we have films, champ, so we can see the unrealistic.

This is a much more in depth explanation of why this movie couldn't happen, then there even needs to be, but good facts anyway. The frustrating part right away was that they had no problem watching the train roll by when either one of them (preferably the in shape one) could've just hopped onto whatever car was nearest to them and climbed over to the front of the train. I guess they just didn't care enough to stop it. Or if they did do that the movie wouldn't even happen. Sometimes movies are so bad it's frustrating.

Instead of trying to shoot out a little switch they shoulda just shot the sh- it outta the bottom of the fuel tanks

The film, while based on an actual incident, is fiction. With fiction comes the necessary suspension of disbelief, making it entertainment.

I know you fellows have fun dissecting fiction so you can display your mastery of the facts. I bow to that mastery. So long as your fact-bombs do not interfere with anyone else's enjoyment of this work of fiction, have at it.