I understand they are looking at the possibility of this becoming a wild trout river but need to figure out how to overcome the tremendous amounts of flooding rains that hit the area.
That was news to me and I don't see how that could be possible. I would say the problem is not too much water, but not enough. The river is wadeable up to 500 cfs of flow and during dry summer months it can get down below 50 CFS. This allows the water to get way too hot for the trout to survive any where but the deepest holes and near the small number of cold springs that exist in the stream-bed.
The watershed that feeds the lake is a giant long chute that doesn't absorb much water. It also doesn't help that rains in the region tend to be few, far between, and torrential. Their worst recent flooding was back in '02. One of my favorite fishing areas on the Upper Guad recorded four feet of rain in less than 48 hours. (you read that right, four FEET) There is a fairly thin band of bedrock that somewhat paralells I-35 to the west which recharges a massive aquifer under the whole area. During more normal rains it works pretty well to manage the rainfall in the area and actually is the primary source of water for all of the cities in the area. However, when those torrential rains occur, it catches about as much as the door seals of your car in a car wash.
Something drastic would have to be done in terms of lake levels, building another dam upstream from Canyon Lake, or some form of legislation to regulate flows to help trout withstand the summers. Texas politics is famous for beign oriented towards low service/low tax and being development friendly. I would be suprised if such legislation were ever developed.
Although the topography may not look like anything typical of Texas, that's actually a pretty good sample of what exists around there. Those trees on the left are Bald Cypress trees and are very common in all of the "Hill Country" they are most commonly on the river banks and their gnarly root systems function as fine cover for bass. That spot I mentioned that got a ton of rain has the trees on both sides of the river and is totally shaded in the summer. It can be 100 degrees outside, but you're in the shade and standing in 60 degree water and perfectly comfortable.