1. If you google Canada Immigration Records retention, you will get a PDF file which shows the retention period for various documents. For example Immigration applications are retained for 63 years after the last time they were active. Renunciation of PR status is 75 years.
I've looked into the exact document. Correct me if I'm wrong, however 63 years would apply for some of the documents, and obviously the record, as long as one's permanent application has been approved. A refused permanent application would have all documents destroyed (DES) 5 years after the last administrative action.
There are some special cases for some permits where the time can extend drastically, for example under serious inadmissibility, but not for general cases of inadmissibility. So, my question would be whether this document is reliable. It is supposed to be reliable, and if they establish a decision based on information which should have been destroyed, then it would be an illegal decision, however I cannot clarify from any source whether that record in the system which says "Applied in 2005, rejected due to ...." is also destroyed or not. They may not take advantage of secrets, and are expected to process transparently.
It is not being mischievous if a human exercises rights for advantage during life, one which is quite short. Should it be an issue with the legislation, for example when it comes to the security of society, then that needs to be sorted separately by making amendments, but I'm talking about the current situation. If they are not supposed to know any longer, you should take advantage if you can. It's like your records are expunged in the US for being a good boy, but you still feel obligated to wear that moral cloak and let officers know about it anyway. Then I'd call the individual naive.