I've wondered why that road was as wide and significant seeming as the main drag, if it just served a few homes and ended. It was possible that at one point, that had been the main drag.
Here's the intersection I'm talking about:
View Larger Map
In the 1930s, the Capitol Way to Tumwater route was significantly different. In the Sanborn Map below (via TRL) you can see how the old neighborhood was configured, with one of the numbered cross streets jogging over further south and connecting with Tumwater.
Here you can see it in greater detail with the current arrangement.
While it doesn't specifically address the alignment change, this document from the city includes a pretty interesting history of the street.