The solution is to either run fewer bigger buses, or to inject a whole load of negative feedback into the system, either by having buses wait for a minute at a few stops until their scheduled departure time (which involves making the route slower) or by real time tracking with radioed instructions to the drivers, like they do on some underground train systems.
Buses need bus lanes or they will not be on time and add to traffic.
[1] http://www.bus-bild.de/bilder/hess-trolleybus-bgt-n2c-16700....
Here's a picture from Naples, but they are common across Europe: http://cdn.c.photoshelter.com/img-get2/I0000bgbDBRzeRa8/fit=...
Buenos Aires used to have a tram, actually. In the nineties you could still see the rails, on the road as you describe. But buses replaced them in forties because as the city grew the ability to change where public transport could go proved to be very valuable.
Every bus you run requires a qualified employee to drive it, and putting them on for only an hour or two per shift would make it even more expensive (what employee would want to work such minor shifts?)