According to this Canadian radio report (in French) and a couple of emails from sources, UFC 97 is back on in Canada. They came perilously close to the brink, and when they started moving the show to Vegas the commission caved.
Note: I do not speak French, but people that do have told me the report confirms the good news.
UPDATE [from Luke Thomas]: More from the FanPosts:
I'll summarize for those who don't know French:
- Lorenzo Fertita & Marc Ratner met with Richard Renault (RACJ head of combat sports) and Denis Racicot (RACJ president) Tuesday evening before flying to Europe later that night.
- The event will take place as scheduled under the usual UFC rules except for foot stomps being disallowed.
- RACJ will hold a press conference (no details specified) explaining the decision.