Not sure about the cost aspect, a Transport Canada friend of mine told me that their figures show a CRJ (50 seater) breaks even at just 14 pax.
Before Comair took delivery of their first one, we flew a couple of their directors on 7003 (the first CRJ with pax seating) as route proving/ testing. The trip was from Cincinatti to Birmingham - then their longest route at over two hours. Our block time was just 46 minutes. It was at that point it dawned on them what they'd got.
The main advantages are definitely cutting the journey time plus the ability to bypass the (other guy's) hub. It also means you can do up to 10 trips per day with each aircraft rather than just four or five.