Third rail isn't an ideal alternative either, since the substations required are expensive. And then there is the fact that NJT needs loco's that can run into either tunnel, not just the new tunnel. That means getting Amtrak to extend the third rail on their tunnels too. And I've heard reports that Amtrak isn't willing to do that. That's even been suggested as one of the reasons, beyond the costs and a few other issues, as to why the current plan has cut out the connection between the new tunnels and the existing Penn Station.
Even NJT is not willing to get into the business of dealing with yet another mode of supplying power to trains. NJT's new tunnel will not have any third rail in it at all AFAIK.
I don't think this has anything to do with the "cutting of connection". The primary issue there is dealing with the obduracy of Army Core of Engineers regarding how close to the bottom of the river the tunnel can be, and the idiocy of NIMBY's in Manhattan (who want to not dig up an unused parking lot while constructing the tunnel), and airhead environmentalists who want to save the bottom of a bunch of rotting piles that mark the edge of the river at the Manhattan end of the tunnel as a historical artifact. Hence the tunnel enters Manhattan much deeper than originally planned and there is no way for it to climb up to the level of the current Penn Station in the short distance available from the river edge to 9th Ave.
And I'm not sure that GE is even building that model of loco anymore, so getting an order of P32-ACDM's might not be as easy as you think.
GE does have an updated version of that locomotive using GeVO technology and a slightly modified but still monococque body in its catalog. So they could manufacture such, but neither NJT nor Amtrak want to deal with them in the highky congested Hudson Tunnels for use in commercial service. Remember that nothing from the era when P32s and P40s and P42s were manufactured would be admissible today since none of them will pass the current emission laws. Even the NJT PL42s with GM 710 prime-movers made it just under the bar before the new emission laws went into effect.
Jishnu will know better, but I do think that NJT's order was more than large enough to interest people. The problem really is as I mentioned above, packing all the equipment needed for catenary running into the body of the loco without exceeding the frame size and maximum weight on the wheels.
The RFP is a joint one involving NJT and Montreal's AMT and the total number of units overall is around 50 or so as I recall. If the engineers pull it off at a reasonable price then there would be other potential takers like SEPTA, MBTA and MARC.
BTW, I think most people agree that putting such a thing together using conventional iron core transformers, specially ones that would work even for 25Hz is beyond a daunting task within the weight limits of a Bo-Bo frame, which is a requirement for the locomotive to be able to travel at NEC speeds i.e. 125mph - remember these would be used for ACY service too if they were available.
One very plausible way to get there is for power electronics to advance to such a stage that there is a cost effective way to put together an HV side chopper facility to create very high frequency high voltage feed into an air-core power transformer which will be much lighter and more compact, and then feed the link voltage from it, typically 3kV into rectifiers to feed the DC link which then would connect into a conventional AC motor drive system (e.g. MITRAC from Bombardier as in the ALP-46A). So instead of the typical AC-DC-AC linkage from delivered power to the motors you essentially get a AC-DC-AC-DC-AC linkage, where the middle AC is high frequency, and to get there you potentially need the first DC link which is at line voltage.
The diesel driven alternator would also then feed into the rectifier bank at about 3kV and thus hook into the DC link that way. Needless to say, to do all this and deliver 4,000 HP needs a little non-trivial and novel engineering which takes a bit of time and money.
That in a nutshell is a highly simplified and glossed over description of how one could get to what NJT and AMT want. Whether they will get it or not at a price that is acceptable, is another issue. But they do have 10 years to get there, since the tunnel won't be there for at least another 10 years as it looks now.