Actually, according to the Act they can do those searches (without a warrant) if they have reasonable suspicion. These aren't random searches -- they do them if they have a suspicion that the person is doing something illegal after talking to them.
There's nothing wrong with acting on reasonable suspicion. The problem is customs has a policy of exceeding their lawful authority in questioning travellers. I don't have any obligation to answer questions such as, "What do you do for work?" or "Do you have any friends in Paris?". Yet these questions are routinely asked, and refusing to answer them will result in punishment.
That's what happened in this case. Customs demanded irrelevant information in order to go fishing, the returning Canadian declined, as is his right to do, and is being punished for it.
Take a look at the Nexus program. It asks travelers to waive their rights voluntary in exchange for being permitted to avoid being coerced into waiving them at each crossing. If more people were aware of the rules and pushed back there would be no need for such programs.
I agree with your other points.