I think schettj's post above explains why:

1. Nokia don't sell the N900 in Canada
2. So Nokia Canada repair centre doesn't know anything about the N900 and doesn't have parts...
3. ... and Nokia never applied for Industry Canada approval for the phone
4. So the N900 isn't approved for use in Canada
5. So even if Nokia Canada sent my phone to Nokia US for repair, Nokia US can't legally send an N900 back to Canada (even a repair...?)

Thanks talk.maemo community. However, in my opinion it's inexcusable that Nokia Canada did not/could not explain this to me themselves. It's not like I'm the first person to ever be in this situation.

I'm almost tempted by the Nexus 1, but I think it's a temporary aberration caused by my N900 being pwned by the desk and Nokia Canada crushing my dreams.

Finally got someone in Nokia USA who was both polite and helpful, who told me that yes, they will repair/replace the screen (she suggested that the repair might possibly even be under warranty(!), otherwise around $100) so long as I have a US address for them to ship it to. They will even pay to ship the phone both ways (within the US). My new plan is to ship the phone to Nokia's US repair facility, who will then ship it to a friend of mine in the US, who will then ship it to me.

A lot better than nothing, and the Nokia US rep was excellent. I was still shocked by how useless (and in one case rude) the Nokia Canada reps were.

I'll update on the long and winding procedure of getting the repair done in case anyone is interested in the future.