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These bolded points are either not true, or debatable.
-There is not, as far as I'm aware, ANY documented or specific law or reg - in Canada at least - that a passport, in particular a foreign passport, is some 'dominant' or controlling source of true/final definition of one's name. It would be a legal nonsense in Canada, because Canadians are not required to have passports, and there is no central national registry of names. (Civil law is a provincial responsibility).
-Change of name is a provincial responsibility, and the only requirements for that are that the individual be resident in the province for a certain period of time - again, no requirement that it be reflected in one's foreign passport or 'approved' by a foreign government. A resident of Canada is ... a resident of Canada, and can use legal facilities like change of name.
-A photo-bearing driver's licence is in actual fact an identity document, in every province I'm aware of. In most, you can get a 'photo ID card' (various names), but you are NOT allowed (all cases I'm aware of) to have a photo ID card and a driver's license - demonstrating that it very much is considered an identity document.

I will agree that in most cases, it would be best for applicants for citizenship to apply for citizenship using their name as shown on their PR card. But it's not formally required, just that you'll have to show that they should use your 'new' name (with supporting docs).

Another route would be to apply for a PR card under the change of name procedures - but that would likely take longer than changing your name under provincial procedures, and a legal change of name (appr'd by the relevant province) is usually going to be faster (and definitely would be accepted for citizenship app).
The legal nonsense I see, is allowing a temporary resident to change their names and other identity information while in Canada. Saying that Canadians can do this is a moot point, they were born here. The guidelines on the IRCC website doesn't even require one to inform their country of origin of these changes. One can essentially become a new person in Canada upon landing.

That being said, you are correct. He can change his name on his Canadian IDs.
 
The legal nonsense I see, is allowing a temporary resident to change their names and other identity information while in Canada. Saying that Canadians can do this is a moot point, they were born here. The guidelines on the IRCC website doesn't even require one to inform their country of origin of these changes. One can essentially become a new person in Canada upon landing.

That being said, you are correct. He can change his name on his Canadian IDs.
The individual in question is a permanent resident - I don't know specifically whether there are restrictions on how this is applied or dealt with for temporary residents. (I'd imagine dependent on tenor of residency and possibly type of temporary status and what ID etc they're eligible for anyway, but not relevant in this case).

And no, it's not 'upon landing' - all provinces I'm aware of require a minimum residency in order to use formal change of name procedures.

But if you mean informal/customary simply by 'using' a different name: sure, it's hypothetically possible. Whether Canadian or not. The extent to which other parties (private, government, provincial, etc) are willing to recognise one's 'new' name is the constraint. Customary recognition implies a (long) period of time to establish usage of that name (sufficient to say that /is/ one's name); in reality, it's not that easy to do - except for cases where the names are similar. (One would have difficulty in society functioning if one just decided 'now I'm Joe Blow' tomorrow - other parties aren't required to recognize it; it might eventually take root, but not easily. Cases where people have ended up with completely different names, as far as I'm aware, are more often things like children 'called' something different from what's on their docs eg birth certificate, and they often may end up having to take legal steps to sort it all out later in life).

And yes, IRCC doesn't make specific demands to inform their country of origin - that's the individual's business, and responsibility, to extent required by law or other, and mostly in a foreign country where Canada has no jurisdiction anyway.