James has been told many times that what he's doing is illegal. Yes you get implied status, but you get it as a visitor, NOT as a worker.
IEC can't be extended, you seem to get that. However you then said that the OWP is a different work permit, so you aren't applying for extension. What you're not putting together is that Implied Status, when referring to work visas, *IS* an extension of your existing work permit meant to bridge you until you get your new work permit. So you are basically saying "I would like to keep working under the conditions of my previous work permit, that is, my IEC visa, until my new work permit, that is, my OWP, is approved." Implied Status *IS* the extension. However, IEC cannot be extended, as you know, and therefore implied status cannot possibly apply.
If you were on a TWP and then applied for an OWP, then yes, you could work under implied status because it's possible to extend a TWP. You aren't issued a new TWP, you simply keep working under the conditions of your existing TWP until your OWP is granted.
See the difference?
This wiki article is worth reading - http://britishexpats.com/wiki/Implied_Status_after_an_IEC_Work_Permit_ends
So is this post - http://britishexpats.com/forum/immigration-citizenship-canada-33/implied-status-iec-815262/#post10993342
As for timings, there is a spreadsheet linked in my signature which shows current processing time for outland applications. It's generally up to 7 months from applying to getting PR in hand, which is about 1/3 the time of inland applications, so yes, I would suggest withdrawing and reapplying outland.
Hope that helped.