So given this, it looks like the Conservatives have decided to stop even pretending that Ablonczy's demotion had nothing to do with Toronto gay pride funding. The Conservatives are gambling that not funding Divers/Cité is going to do more good appeasing their base (which may be a bit disgruntled about all the bailout money) than harm losing the gay vote and the Montréal vote. Divers/Cité seems like a prime target Tories since clearly not many gays vote conservative, and Montréal is a wasteland in terms of Conservative electoral hopes: the entire metro area (even far-away suburbs, unlike Toronto or Vancouver) wasn't even close to electing a single Conservative in the last election.
This calculation may end up backfiring, though, if it costs Tories votes in the Québec City area, since they may find themselves in several tough fights there to retain their seats. I doubt that this will have an effect outside Québec, in ridings where the Tories have a shot.
This also fits into the pattern of Tories redistributing public money to further their political ambitions. Remember the $2.2 billion fiscal imbalance "resolution" given to Québec in 2007, and how when it was subsequently clawed back through tweaks in Equalization, there was suddenly money for GST harmonization for Ontario?