I agree with your attorneys. It seems like everything was going fine and dandy and that the owner who complained just wanted a reason to remove a board member so he could get on the board, too.
If that owner really insists and your attorneys feel he/she has a case, then I advise you to go ahead with the removal. You can always re-elect the Canadian anyway now that he’s a real homeowner.
I recommend you follow what your bylaws say. If you let this pass, then you’re setting a precedent, which means others can run for board positions in the future without being a homeowner on paper.