It was a bad decision because
1- the Arrow was the most advanced aircraft in the world at that time
2- it was designed to meet the requirements of the RCAF, something it did completely
3- the cost for development was already essentially spent
4- thousands extremely skilled jobs were lost
5- it nullified the capacity to eventually export the aircraft
The result was that extremely skilled engineers and scientists left the country and went to work for aerospace companies and NASA in the US, given that there were no such companies in Canada capable and willing to use their capabilities; the result is that those Canadian engineers were instrumentals in developing aircraft and spacecraft that ultimately landed the US on the Moon.
Meanwhile, Canada's unaddressed air force requirements were 'met' by purchasing second hand US fighters and deploying US nuclear missiles in Canada.
So, Canada ended up paying twice -- once for developing the Arrow, once for buying inadequate 'replacements' -- and lost en extremely valuable expertise that would have kept Canada at the front of technology.
Whatever research you found that supported cancellation is obviously inadequate and one-sided. Where exactly did you find that?
Edit: to "lowlevel" below. When in heck did you get this claim of better performance from the Rapier that never actually flew? It never even passed the point of mock-up, for crying out loud, a mock up that was first presented one month before the Arrow got cancelled, amid numerous and frequent specification and design changes. The Arrow had been flying with the inferior development engines for nearly a year when it got cancelled; with the Iroquois, it would have beaten the world speed record, and there were development proposals for a version that would have flown faster than the Rapier. And yes, that included replacing key components stock with titanium--the Arrow in its prototype form was already the largest user of that metal at that time.
As for the SAGE 'incompatibility', this is the epitome of ridicule. The SAGE system was limited in range, so the Arrow was _designed_ to be able to work without its support.
As for the impact it had on the aerospace industry, do you know any engineers who worked on the Arrow? I do (actually did, they all retired years ago, and few are alive still) and they did say it has hurt the industry.