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Unless Canada has some fucked up shit with their copyright laws, the example you used is a flat out lie. You can always redownload something if you have previously bought it, even things MS lost the rights to. Xbox originals is also still up and I used the Xbox as an example since it has the highest attach rate of the consoles, not because of online policy.
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Honest to goodness, it absolutely happened. I had Psychonatus, GTA: SA and...some game. All of them just disappeared overnight, while my 360 was plugged in. The core files were still there, that is, the 7GB of Xbox originals, but inacessble and no option to download them again. I tried about a dozen times over the course of a month, gave up and deleted the files. I am still pissed, vaguely.