IIRC the A1 Trust's Rob Morland is confident that there are no fundamental obstacles for steam if they have sufficient power and room, their Autumn 2015 newsletter "confirmed that Interfleet Technology had approved our scheme for fitting ERTMS signalling equipment with an application date now fixed for 2019"
As for freight, ETCS is already used by freight trains on various lines in Europe and beyond - the Betuweroute and new Gotthard Tunnel being obvious examples.
What's proposed (and already in wide use) is ETCS Level 2 which still involves blocks with axle counters or track circuits, but without the constraints of lineside signals.
While Level 3 has yet to be developed, it would also do away with track-based train detection - this presents obvious difficulties for freight trains and confirming their integrity.
However there is a hybrid solution under consideration, as described in the article below - this would retain blocks with track-circuits or axle-counters, but with ‘virtual blocks’ within them.
The Rail Engineer: ERTMS Level 3 - A possible way forward