I used to agree with you on the benefits of a single system, but I have less faith in the people in charge now. Those in the Ministry of Education and TDSB aren't exactly big on allowing different streams of thought within the public system. I would support a charter/voucher system as long as it excluded faith-based schools, but that isn't a popular view either.
According to the Toronto 2011 survey, 28% of residents identify as Catholic. Additionally, as you allude the TCDSB is not very strict about admittance: officially, in order for a child to be admitted to the system either that child or one parent must be baptised Catholic OR have entered into a program to become Catholic. Unofficially, staff will turn a blind eye if capacity is available. When you combine this with the fact people within the same ethnic group have a tendency to cluster together, there are parts of the city where a large proportion of the population are eligible for admittance to the TCDSB.
Generally speaking, the current system is explicitly constitutional - the British North America act provided for funding of a Roman Catholic school system up to Grade 10, and the 1982 constitution has the same protection. Bill Davis extended that to the end of high school, which is basically all that could be revoked without an amendment to the constitution (and good luck with that one). That's why John Tory proposed funding for all faith-based schools - because Ontario is constitutionally prohibited from revoking funding for Catholic schools.
On a side note, it was only in 1988 that courts ruled against (The Lord's) prayer in public schools. I used to say the Lord's Prayer every day in elementary school in the mid-1980's. In the scheme of things, it hasn't been that long since the public system really was the "protestant system". We've come a long way since then, but are laws are not so easy to change.