...You don't need to go after every last house. Dense neighbourhoods in other cities often still have a lot of houses.
Someone's been drinking the Pam-Aid.
The blocks immediately adjacent to the Cook Street Vilage are filled with detached houses.
The 3 houses behind Mac's/Pic-a-Flic are not exactly on the endangered species list. The CSV has been dedicated a large urban village in the City's OCP.
I don't think it is unreasonable to see increased density on the properties immediately adjacent to a large urban village's main thoroughfare, especially when they fall between properties of existing greater density (i.e. multi-storey apartment buildings that have been there for 40+ years). I cannot think of a more appropriate place for this sort of increased density than this location.