With respect to any changes to academia that are contemplated towards improving the engineering profession, to me, it depends on the approach and perspective.
One way is to simply "dumb down" the requirements for being qualified as an engineering professor. In other words, saying (in effect) that a PhD level degree is irrelevant (or of little practical use) because it tends to focus on things that do not prepare the majority of college / university graduates for their "job", per se. The other approach is to impose *additional* requirements beyond the PhD so that those doctorates teaching engineering have a better grounding in its practical, day to day application.
I would argue that both of the above approaches would probably water down the "theoretical" elements of the science, and that it would be a dangerous road to go down. In the latter approach, I would predict the evolution of an academic culture in which some of the teachers could teach only the theory but not the application, and the rest of them would be looking for ways to simplfy the theory in support of their effort to teach the application. It might also discourage certain PhD-qualified individuals to select a faculty other than engineering in which to teach and conduct research, thereby further diluting engineering talent.
I believe that it might be best to dedicate a course or set of courses concerned with practical applications of the theory as part of a mandatory core curriculum, and if necessary, look for those individuals who are appropriately qualified based on a combination of academic and professional practice credentials, to staff those faculty positions. I think that might be enough to help the students "make the leap" once they graduate.
With respect to "PE" versus "not a PE", or for that matter, "P.Eng." versus "not a P.Eng.", at the functional level, it's probably no different in Canada than it is in the United States, apart from the fact that there is little to no market value for non-P.Eng.'s up here, since without a P.Eng. signing off on everything you do, it's effectively useless. With that in mind, I do favour regulation, as opposed to deregulation, of the profession.