There is a 4% incline, but only to 3" at the switch, so it doenst need the full 8 feet. The remaining 1 1/4 inches over the tunnel is made up after the switch with another small 4% incline section. And when I designed this, it was with smaller switcher locos and only a few cars in mind as it was supposed to be a logging area.
I see you are using a switcher, but the number of cars really depends on the size of the cars. You only have so much room on the switchbacks, so dont expect a huge consist of full size log cars or flat cars. I'd say 5-6 log truck pairs with smaller logs or 2-3 of the full size flat cars for bigger stuff. Remember too that you can get traction tires to keep the loco from slipping, but at 4% you should be ok.