Can confirm students have been given warnings if admin found out about them doing horizontals without permission, but a lot of students do them anyways. It's really not that hard to register one. Some specialties are harder than others, but there are still a lot of opportunities available. That is also not the reason that girl was suspended for a year.
Going off your other points: Yes, it may be difficult at times to figure out what you would like to do in a 3 year period. However, the majority of students are able to explore different specialties and narrow it down before clerkship. Additionally, you do not always need to know your specialty of interest when you're starting clerkship as there are clerkship streams that have later elective periods. If you are unsure of what you want to do with your future, there is also the option of taking an enrichment year. The struggle of COVID is not unique to McMaster and is something being felt around the country. Mac is in the exact same boat as the other clerks at other schools and would have no more of a struggle than other schools that are also having everything delayed and up in the air about electives. They're in the same position for residency. Mac was at least able to compile a virtual platform for learning for clerks and pre-clerks, which of course can have downsides, while there have been other school(s) that have more so left their clerks to fend for themselves.
The "lottery" for electives is only for pre-clerkship electives (that do not matter). Real clerkship electives are left to the fate of AFMC just like every other school.
Yes, the pharmacology portion at Mac is lacking. However, I would argue that the majority of your learning (diagnosis, management, pharmacology, what have you) is learned in the clinical setting. You can learn as much, or as little, as you would like during the pre-clerkship years.
It is also very unlikely that residency programs are going to hold being part of a "lottery class" against you. Residency positions are determined based on your personal statements, extra-curriculars/research/volunteer, reference letters and interviews. They do not consider which school you come from, other than a likely home-school advantage. Being a "lottery student" has absolutely no role in any of those things. If you have good letters, you have good letters.