By all means apply for citizenship.
A few questions:
-when you say "continued CBSA harassment", how many times has this happened? It reads above like this is the first time you crossed the border in several years and certainly since receiving the card.
This was the first trip across the border since we received our cards. This is the second harassment since returning originally in Feb 2018. I had to attend a business trip in Jan 2020, when my card had originally been applied for [but not yet received] and we crossed the border by car...We had a secondary interrogation then, they let us, and we weren't issued anything - they said that we should wait if we can to travel again after we receive our cards (and then COVID happened, and no one was travelling).
-when you crossed this time, can you describe in a bit more detail - specifically, did this interaction just take place at the booth (usually called primary), or were you made to park and go into the building (secondary usually)?
This border interaction was in our our car only at the booth - we never went into the office. When he scanned our cards I guess, he said, hmmm I see a GSMS code 303 [or something] and he was like what is the issue with your residency obligations? I told him point blank, we were in the US for family business and issues beyond our control and unknowingly overstayed our RO. We were unaware of the residency obligation but returned home as soon as we could - that was in Feb 2018. I said, we are well compliant with our obligation now, and have received our PR cards after two years of review. The officer also asked how we became residents. I told him we were both sponsored to come here [my by my ex 27 years ago, and my husband by me 13 years ago]. He went on to say that our residency will probably be investigated, and there will be hearing for a removal order - when he said that, I said based on what , how and why? We have NEVER been served nor received anything. I said that we have kept our address information current with IRCC and that We were just in the IRCC offices TWO days ago, and they said our H&C case for PR card renewal despite not fulfilling our residency obligations at the time of application, <<<< has been approved>>>>>, and we will be receiving our cards, and we did get our cards on Nov 25th. IRCC also said we can travel as we please, but to stay compliant with our residency obligations. I further asked, what is his issue? He called back to the office, repeated that we should respond to any mail we receive and said here are your cards. He didn't say anything additional, and let us go.
-Were you made/asked to sign anything? Show anything apart from eg PR card and basic identification?
We were not given any papers, we were not told or asked to sign anything. We only showed our PR Cards, US passports and our proof of Vaccination (which we really didn't need). I also logged us into Arrive Can, so we can have proof of the two hour crossing.
-Could you provide a little bit more background on your return to Canada (seemingly more than three years ago)? Was there any significant interaction with border agents then? Warnings, no formal notice I understand, anything else?
Our initial crossing was a pain in the a$$ - In 2018 - the officer tried to goat my husband into a fight but couldn't. They asked us if we wanted to renounce our residency, and I was like NO. I had my three Canadian children with us when we crossed too. I had provided my offer letter to my new job, my kids' passports, etc... We were in the office for quite some time, and they seemed really irritated at us. They were yelling at my husband, who kept his cool, and would not budge at their goading.. [for no reason - but as I read now, I guess they hate people who don't comply with RO.] Interestingly, this specific crossing has had a poop ton of complaints and actions against them, including some officers having been fired since were first there.
-You refer to having a formal H&C approval - when did this happen and in what form? Did you receive eg PRTD with the H&C code?
We secured a lawyer upon returning home to Canada, and were going to wait out two years until we were compliant within RO before applying for our PR Cards - but I had a business trip looming, and we had to submit our application early. We did apply for PR card renewal, based on H&C considerations - we had 699 days in Canada at the time of filing. It took us 21 months to get our cards. Our MP keep checking on our case, our lawyer checked our case, and we got abbreviated ATIP notes from IRCC - it appears our case was conditionally approved in Sept 2020 [so a little over 6 months after applying] - however, we had to wait to go into the offices and weren't invited until Nov 8th for a Nov 25th appointment.
We applied to renew our PR Cards from within Canada and coming from the US into Canada, we did not require a PRTD to enter by car, back in 2018.
This is the original background of our story:
https://www.canadavisa.com/canada-immigration-discussion-board/threads/file-for-pr-renewal-with-h-c-or-just-visa-exempt-status-to-go-home.519477/
My further suggestions really do depend on some of the above. But it does sound like an enforcement flag, and while it is seemingly hard to get these removed, what may have been a factor is if this was first time across border (and hence first interaction with CBSA) in a long time. While the flag might not be removed (i.e. removed from the file) easily, but more recent interactions and conclusions may weigh more heavily in future interactions - or put more simply, go through a few times and they'll pay less attention to an older flag.
It's important to keep in mind: IRCC and CBSA have overlapping mandates and work together, but they do not (routinely anyway) see and evaluate the exact same information - they have different systems. It's quite possible the CBSA officer did not see (or not easily) the info about the 'H&C decision' you refer to.
On the positive side, if you were not called into secondary at border, I believe that is a good sign. If this is the first time across border in a long time, situation is quite a bit different than if it's happened dozens of times.
This was our first return in almost two years, and we plan to come/go as we please. We are no longer prisoners here, as we were. I was thinking to take my paperwork into that specific border crossing and request that flag be removed - but I think it would only hinder issues. I have also learned that only 'acts of God' remove those flags, and our 'act of God' will be becoming citizens. Our applications are already in the system, but we did not have any formal provincial or Canadian ID like a Health Card or DL, which is needed for the application. We should be getting those soon as we went into ICBC on Saturday, and got our photos taken. I can't tell you how it feels to NO LONGER feel like an illegal alien!
A family member previously had a flag of a different type - due to having renounced PR - and was called into secondary at airports when arriving on TRVs . After the first time, it was considerably more relaxed even if a bit tedious. Anyway, will await more information to say more.