You're correct in what must be demonstrated for Subway to prevail, but I don't think Subway would be a shoe-in to win. I think Subway would be hard pressed to prove that there would be a significant percentage of patrons that would walk into Steakway thinking they were walking into a Subway. A "sandwich" is a pretty broad category of food items, the logos bear no similarities, etc.
I also don't think the "Mc" example in the news items applies in this case. Americans know that McDonald's likes to slap "Mc" on the front end of lots of diverse products: McFlurry, McMuffin, McRib, etc. Subway doesn't have a track record of slapping a "way" suffix on the ends of their product lines.
However, I don't blame Subway for doing what they think they need to do to protect their trademark... just like when the Beatle's Apple Records tried to sue upstart Apple Computer or Domino Sugar tried to nix Domino's Pizza.
The "Monster" lawsuit is going to fail too.