a criminal trial is based on 'beyond a reasonable doubt'. Nowe, we had a whole class in criminal law on what this means, but basically 99.9% sure. It's the crown's job to determine what cases have a chance at meeting that standard and what do not. What do you base that on? In this case, I'd suspect that they looked at his blood alcohol level, the number of people who have been assulted in cars by this gentleman, and the forensic evidence (which appears to be quiet different from what the initial reports were).
The defence wouldn't have had anything to do with the footage. At some point they could have raised it, but not at this point. I read a few articles about what was said in court today, the Toronto Star's was much more detailed, and showed it was the right decision (from a legal point of view, moral arguments aside).
I'm not suggesting that dropping the charges is the 'right' thing to do in any sense other than the obligations that the Crown has in prosecuting cases.