At the risk of sounding like a modern-preservation "hyperbolic," I have to say I have some affection for the existing North Market. With an interior paint job, it wouldn't be that ugly. Still a bit ugly, yes, but with some provincial-International-Style appeal.
But as to realistic solutions: I don't think there's any excuse at all for faux-historic on this site. I think those who don't know the St. Lawrence neighbourhood well tend to overestimate how much Victorian architecture has really been preserved. Most of the area is dominated by 70s, 80s and later construction, largely condos -- the more "historical" of which tend to suck exactly to the extent that they try to be Historical. (Take King James Place at the SE corner of King and Jarvis.)
On the other hand, there's one lovely example of contextual neo-modernism: the KPMB-designed office building on King just west of St. Lawrence Hall. It uses brick, stone and large windows in a very contemporary (c 1990) way and hasn't aged a bit.
Babel has the right idea.