Real Answer to Hypothetical Question
Thanks to commenter Geoff, a "bona fide political scientist", we get an answer to my question(s) regarding what would happen "if the Conservatives win a plurality but can't form a government".
This is a very good question (or series of questions), as it addresses the grey area of the Canadian Constitution, that is the "reserve powers of the Crown," exercised federally by the Governor-General.
To make a long story short, Paul Martin asked for the dissolution of Parliament in November, but he did not resign as Prime Minister. He and his cabinet are still in office, in a caretaker role. In theory, even if Paul Martin got FEWER seats than Stephen Harper, he could decide not to resign as PM and suggest to the Governor-General (probably after talking to Layton and Duceppe) that he would like to try to continue in office, as the leader of a minority government. (He has the right to make the first move.) She would then canvass the leaders of the other opposition parties, including Mr. Harper, and ask them for their views. Her job in this situation is to allow the leader with the best chance of enjoying the "confidence of the house" to form a government. She would also respect any formal coalitions. Therefore, if the BQ and NDP said they would prefer Martin over Harper (and let's assume it's a four-party House of Commons), then she would presumably agree to allow him to continue. If however Harper looked like he had more support, in the form of a seat count, then by convention she should "dismiss" Paul Martin, whether he wants to go or not, and ask Mr. Harper to form a government. As you can imagine this could take days or even weeks, as sometimes happens in European countries. Whoever forms the government, with a minority of seats, then has the same job that Martin had for the last eighteen months--that is, piecing together majority support to pass a budget this spring and any other viable legislation.
This reinforces the idea that the House of Commons is not THE government, but rather the link between the people and the government. The government is "responsible" to the House of Commons, and it is the House of Commons that is directly accountable to the people, through elections.
Like the U.S. Electoral College, it is possible that the party that gets the most votes, or even the party that gets the most seats, may not form the government.
This situation would make for some interesting deal cutting.
One final interesting point. Suppose that either Harper or Martin forms a minority government this coming week. Then suppose this April-May he is defeated on a budget vote, a la Joe Clark in 1980 (and the country must have a budget). Does she dissolve Parliament, after only 3-4 months, or does she ask the other major leader to give it a try, without an election? She would probably be guided in part by the comments of all three opposition parties, but it MAY be within her power to keep the Parliament going.
Either way, the G-G's legal advisors could be busy...
by Geoff, a bona fide political scientist
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