"He has GPA & LSAT scores which would guarantee him admission into HLS,YLS"
No one is guaranteed admission to YLS.
"Networking, as you probably know, is a key factor in job opportunities after law school. Studying in Toronto is going to prevent said person from networking in the New York circles, and hinder his/her chances at getting the highest paying starting salary."
A decent amount of top american firms do OCI in Canada. Getting a new york biglaw job has nothing to do with networking.
"but you'd get back over $50,000 for your summer internships"
I wouldn't count on getting a high paying job for 1L; it's possible to get a good position, but I would not factor it into the calculation as a given.
"start work with a salary and bonus of around $200,000."
More like 170K-180K, but close enough.
"Further there are close to zero graduates of Canadian law schools working in the best firms, and convincing them to hire you would be very, very difficult."
American firms hire the top graduates of McGill and Toronto regularly. These firms also hire UBC and Osgoode grads, though these are fewer. If you are top of the class and you want to work in the states, you can get a job paying martket.
"Sullivan & Cromwell is a bit of an exception. Wachtell and Cravath both have zero lawyers from the University of Toronto."
There are far more firms that pay market than these three. In fact, there are over 100 more firms that pay market. Some firms do OCI in Canada, some do not.
This is a very hard decision. If you graduate top of your class from U of T and you don't have social retardation, you can get an NY job. Unfortunately, planning on achieving top 10% at any school is pure idiotic arrogance (I'm not saying that you were planning on this). On the other side, median at Harvard can get you into top firms, and will definitely get you at least market pay; however, that's 150K american later. Suppose you hate corporate law or they change some rules with NAFTA (unless you're an american citizen), you'll be fvcked.
It's a hard choice and either way is a gamble.