It is completely legal for any landlords to require a deposit of last month rent. This is under Ontario's law.
http://www.ontariotenants.ca /law/act07.phtml#RTA106
Do keep in mind that they are suppose to pay you interests on such deposit at the end of the year. Make sure to let them know that you know about this legal requirement when you sign the lease and hand over the deposit.
A friend of mine lived there and he love it. It is very spacious! Internet has its quirks but if anything, it motivate him to stay on campus to complete his work.
The location is amazing. Bus stop directly in front of the place, tons of shops and restaurants surrounding the apartment.
He never had problem with management and quite enjoy his stay. Last time I talked to him, he said he will be continuing his stay.
Have you taken a tour of the West Village Suites yet? I promise you will instantly fall in love with the place.
Another possibility is to look into student housing provided by City of Hamilton. You get bachelor apartment for $525.
http://www.hamilton.ca/HealthandSoci...g/features.htm
That particular location is also very convenient. Close to buses, mall, and everything else. Just make sure you get a unit that is not facing the street and is in the upper floor as that area can be a bit noisy.
Other than that, since you obviously have a bigger price range than most students, find someone and rent a two bedrooms apartment. There is a truck load of apartments by the Main and Whitney area.
Good luck! Don't be scare of West Village Suites. There is a minority that did not enjoy their stay and will actively boycott it while the rest of the tenants loving the convenient, design and purpose of such establishment. If it wasn't the case then your grad student friend won't have highly recommended it.