snap!

Because you have listed an interest in research jobs, presumably the places that you would be looking to hire you are going to be familiar with the institutions that produce cutting edge research. If the Canadian schools that you want to apply to are top-notch research institutions in your field, you shouldn't hesitate to go there. In particular, the choice is easier if you get in to a really great Canadian school in your field and a not-as-good American school. However, if you're thinking of looking beyond research jobs once you get your PhD, I suspect that unless you went to one of the really well-known Canadian schools, most employers wouldn't have heard of your PhD institution and this may negatively impact your chances of getting hired.

How competitive it is at the university level depends a lot on the particular university. One must consider not only the quantity that the school is allowed to forward to NSERC but also the quantity of students that apply internally within the department. At some schools, there are tonnes of applicants. Furthermore, since a large part of the PGS-M application is based on marks, the difficulty of getting through your school's internal selection process will depend a lot on how your marks stack up to your classmates. If you attend a school with lots of grade inflation and most people have good marks, obviously the process becomes more difficult.

Anybody else starting at Oxford in the Fall? I'll be doing DPhil, affiliated to Univ.