I'm quite familiar with the condo act in Ontario and you are correct in stating that the rules have to be reasonable. However, if the no pet rule already existed and was also included in the declaration prior to purchase, the purchaser had ample information when reviewing the status certificate to note that there are no pets allowed. In that case the courts will rule in support of the condominium.
However, if a condominium changes the rules from allowing pets to no pets, then you are correct, that is unreasonable and cannot out right prohibit them if the pets already existing in the condominium, but the condo can limit the weight, size or number of pets in each unit, again still have to grandfather existing pets if the weight, size, etc. is exceeded. Unfortunately that is not the case in the Oldstud's situation, the purchaser should have known prior to moving in as the rule already existed and the courts have upheld the rule in these situations.
I am a director on several condominiums for many years and work very closely with the top legal firms specializing in condo law and have gone through this situation many times, among other issues involving condominiums.