It's been posted before but Zzap has a number of projects that do a good job of handling these sorts of sites:
https://www.zzap.ca/
I think the Waverley Inn approach is infinitely better than an alternate version where the old hotel gets torn down and then a lowrise Victorian-style building with cheap faux detailing is built up to the street. In principle there's no reason why you couldn't build a good looking new 4-8 storey Victorian-style building (I think it is easier than ever before because of so many new materials and technologies like CNC milling) but it doesn't seem to work out. I do wonder if we will suddenly have a new kind of architectural golden age when architects and developers get over their modernist ornamentation phobia and get more creative in applying all the new technology.