I like some graffiti. I think it is clear that some people do actually put time and effort into what they do (even if it is illegal) and take it seriously. In certain cases, I think it can enhance a neighborhood. Also, depending on the colors and patterns used it can often brighten up some of Toronto's grayer areas (and lord knows this city loves that color). It can enhance more than pseudo punk areas as well. Just as an example, along Duplex St. north of Eglinton, some guy did up his garage door to look as if he had a Bentley. It's small, obviously, but it does personalize things a bit and provide a bit of variety. I think it is important to distinguish between what for lack of a better term can be called art-graffiti and punks just tagging a restaurant. That I have no sympathy for and succeeds in making any neighborhood look downtrodden and dead.
So, as I see it, the goal shouldn't be to try to eliminate graffiti and turn Toronto into Singapore North America but to just try to eliminate the tagging and like and promote the more arty variety. Work with landlords to see if wall space could be converted to mural space. Have design competitions of sorts and just repaint them every 6 months or so. Of course with the carrot comes the stick, sand blast all of those damn tags and try to actually make an effort to discourage the behavior.
Ohh, and as much as Toronto does sometimes take pride in being grungy (fliers on light poles. anybody?), graffiti is really not a Toronto issue. It has been going on since cavemen times in every culture, often to greater degrees than anything you would see in Toronto. As much as we have a perpetual Europhillia here, graffiti is definitely not unknown over there. In a lot of cases, graffiti artists are treated much more as real artists than they are here banksy being a better known example. And anybody who would suggest that there is more graffiti in Toronto than Cartagena hasn't been to one of the cities.