I would like to point out that there is no longer a waiting period for OHIP. There is technically a physical presence requirement (153 days) but you can get your health card as soon as you take up residence in Ontario so I'm not sure how they enforce the requirement...
"processed 30% of applications within the standard" is really awful performance, it would be funny if it wasn't so frustrating (https://www.canada.ca/en/immigration-refugees-citizenship/corporate/mandate/service-declaration/service-standards.html)
Yep, that's correct. Apparently, only the big "Full Service" ServiceOntario sites can issue a health card based on AIP for some reason. If you use an OWP, you also have to provide a job letter, according to the Ontario website.
It's my understanding that IRCC no longer sends separate AORs for sponsor & PA and they have not updated their website regarding this. I believe IRCC will invite you to do the Quebec paperwork.
Since your wife is not currently working, she does not have an employer, so she cannot choose option (i). Her status is still valid so she cannot choose option (iii) and option (iv) does not apply to her. Therefore, she must choose option (ii).
See above, the tracker is not working for anyone since mid-June. You can file a webform for technical issues. Maybe if more people do so, they will fix it faster.
You can apply for OWP without AOR only if the PA's status is expiring within 2 weeks. Once submitted, the PA should have maintained status as a visitor and they will be allowed to stay.
Apply for OWP when she is within 2 weeks of her WP expiring or after you get AOR, whichever comes first. That will give her maintained status and be able to stay.
Yes, it's not working for anyone. You can raise a webform under "Technical Issues" and maybe they will fix it in the near future. We did that but of course haven't heard back yet beyond the automatic "we received your documents" email.