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Riding on the pavement/sidewalk seems a bit weird - the old folk get run down a lot... although that's just like in Netherlands, Denmark, etc where cyclists are the kings, but the dutch only run you over when you're walking on their cycle lanes, so you only got yourself to blame really :)
They'll ride any pavement so you don't NEED bike lanes/streets, but they can help if you plan them carefully to intersect with your public transport lines. Can look good too, maybe you built a nice custom park that no-one comes to so, slice a bike path through it and add some life?!?
I would hope (in a deeper gameplay sense) that encouraging cycling helps your city health a little bit (although no city has health problems). Maybe it could increase road traffic accidents as cyclists are dangerous to themselves and other road users in my experience - but again, not implemented in the game sadly. How I'd love to see a reckless cyclist mowed down by a giant Ore Wagon after the cyclist ignored the stop light.
No, no repurcussions.
If you have that much traffic, maybe you should be looking at balancing your zones so you don't have so much traffic. i.e. a good jobs to worker ratio. Other wise with too many jobs then cims will drive into your city, or too few and cims will travel to jobs elsewhere.
But I imagine bikes are slower than cars.
Maybe check out your mass-transit options. A simple bus route can greatly reduce traffic as well.