I wouldn't mind adding a few extra stories, but I really like the current design. My guess as to why there has been no movement is labor shortage, but my guess is a good as yours.
I don't think the current design would work if the building much taller, but if it was to be redesigned, I would love for them to add another few stories of condos.
In regards to the municipal plan, what are the chances of council changing the height regulations is the west end. It is something I would love to see, but for some reason I highly doubt it will happen. I'm not getting my hopes up.
So, personally I hope the original proposal does go ahead. The deacon building is my second favorite project on the go right now (first being fortis place) but I'm not sure how the brick will look in person when it is finished. but I would not mind it at all if it was to get an attractive redesign that adds a few more residential floors.
Basically I'm indifferent
Edit: after revisiting the renders/view plane analysis I think the deacon building design could work well with a few more floors. We'll have to wait and see