a steepness penalty could make sense!

your example (from market & taylor to the top of nob hill) is a nice illustration: (1) straight up taylor is 229 ft of climbing at 25%, (2) via polk and california it's 251 ft at 13%.

as you probably noticed, we only look at the total elevation gain, so taylor "wins"... but I see the argument for preferring an extra 20ft of a more gradual climb.