I think it's best to regard both kinetic and potential energy as
"bookeeping" quantities. Only differences in energy values obtained in a
given inertial reference frame have physical meaning.
Since the observer on the train feels the forces from
deceleration, he or she should realize that the train is not an inertial
reference frame. Thus, computing the change in the observed K.E. of the
tree has no physical meaning.
Mark
Dr. Mark H. Shapiro
Physics Department
California State University, Fullerton
P.O. Box 6866
Fullerton, California 92834-6866