I also had to choose between Ottawa and Western. I chose Ottawa. Most days I think I would make the same decision if doing it again. Some days I don't. Not a ringing endorsement, I know, but it's an honest one.
I wasn't aware that Ottawa's reputation is "diminishing"; if you think Bay St. hiring means anything (and I don't think that it does, really, but it is a metric), Ottawa placed more students on Bay this summer than any of the previous five years, and at most of the biggest firms. We didn't get any at Davies, but then neither did Osgoode.
But you don't care about that. Ottawa is rapidly becoming more focused on social justice issues in law. It's clear that they are attempting to attract a particular kind of student, which is fine and I'm sure will work well for them even though I don't agree with it.
The building is awful, but not overcrowded. I'm there every single day and have never had a hard time finding a desk to study and and usually get the same one most days. Don't get me wrong though, the building is bad.
The student population is very diverse. Most people aren't doing Bay St. but that's also because many people had no interest in doing it whatsoever.
I don't know how hard RA positions are to come by, but it seems as though if you have the grades you have a good shot. I've worked for two professors and can think of five or six of my friend group who have had RA jobs as well. The clinics were either not very popular this year, or they were unsatisfied with the applicants; they extended the application deadline twice and sent a number of emails inviting students to apply (of course, this could have just been a one-time thing). None of my friends are on the law review, but none of us applied either. I meant to but forgot about the deadline last year.
I don't know anything about government positions because I've never looked into them; hopefully someone else can answer those questions for you.
This is purely anecdotal, but all of my friends have paid legal work in the 2L summer, and the 3Ls I know have articling jobs.
If social justice and class diversity are your priorities, you would be very happy (probably happiest) at Ottawa.