"the more scholarships a university is allocated, the more turnover as well and a better chance of applicants that didn't quite make it getting 'bumped up'"
You are right in the case a university has several accepted candidates, and some of them refuses the award for any reason.
In a related question, I am not sure there is a "minimum" quota allocated for each university that NSERC would try to fulfill. My understanding is that universities can present a "maximum" number of candidates (fixed by NSERC), but let's say only 30% of the candidates allocated are selected for a scholarship, then NSERC won't try to boost that to 60% for a specific university just because it has more money. I think it just selects the best candidates possible, without regard to the university allocations. Of course, we are all just speculating I guess, since it is not really clear on the web site.