I learned something new today !
I have no proof of chain of events (it was before my time) ... but from what I've read, that the canal was following the Frankstown Branch of the Little Juniata River terminating in Hollidaysburg, connecting to the hemp rope pulley Alleghenny Portage Inclined Plane Railroad to Johnstown.
Continuing westward from Petersburg, the New Portage Railroad began cutting it's own Muleshoe line railroad bed about the same as the PRR was cutting the Horseshoe line, (and the New Portage Railroad was a competitor of the PRR which began cutting its own line in 1847).
The Horseshoe was opened in 1854, @ 1 year earlier than the Muleshoe.
The heyday of the PA canal period was @ 1790-1835 ... New Portage Railroad opened the Petersburg-Hollidaysburg-Tunnelhill - Muleshoe mainline in 1855, but was abandoned in 1857, and reopened by the PRR in 1904 as a low grade ore drag line.
Only when the Horseshoe was completed in 1854, did real heavy duty railroad operations go full steam ahead in Spruce Creek-Tyrone-Altoona (@ 1847 construction began).
The Muleshoe Curve was built by the PA State, to bypass the Inclined Planes (opened in 1855).
http://www.abandonedrails.com/New_Portage_Railroad
The plaque at the Horsehoe Curve states that the line south, the Cove Secondary - Alto to Wye (Hollidaysburg) was the original 1850-1854 PRR Mainline ... How can that be, if the Muleshoe line wasn't opened until 1855 ? If the freight and passenger trains were going south to Hollidaysburg in 1850, and the Muleshoe wasn't opened for another 5 years, the PRR mainline must have teminated there, and passengers and freight were transfered onto canal boats and barges being hauled up the Inclined Planes.