It is true that this may seem as a reward to those "law-breakers." But it is seen by social-modest govenment like Liberal, as a "lesser" of other painful options such as fored repatriation or maintaining camps for those peole.
The flip side of this is:
(0) First of all, legal or not legal in this context of "right to stay" all depends on time and place. I.e. Lot of us (so-called legal ones) will NOT be able to stay legally, if Canada (a) is NOT an immigrant-friendly country like in most Europe or (b) not at its immigrant-friendly time in history like in pre-1950.
(1) Illegal labour usually depresses the condition for "legal low-end labour market" since illegal workers usually work in bad condition with very little pay. So to help the legal "low-end labour market", the solution is to bring all illegal ones to the open market and have them stick to Canadian labour law (e.g min salary and CPP). This is almost the same reason that western countries want China in WTO and Unions here want workers in China get more pay and the same labour protection.
(2) Lot of illegal labours are victim or low-level "foot soldiers" of the criminal activities. They either do not dare come out in open to report criminal activities or need to risk a lot to get some protection from crime boss to stay in Canada. So major crime syndicates often thrive at place where there are large illegal migrants body. So giving these "boat people" some right will help stem the domestic crime groups. This is almost the same logic that Liberal wants to legalize the pot.
(3) To sooth some conservative opinions here

It does NOT happen all the time in Canada (I remember, to Chinese, last time was 10+ years ago after the event in Tiananmen.) It can be seen as a very very compassionate & humantarian move to those people and their family who may have gone thru alot in situation (1) & (2) for long long time.
To me, everyone deserves a chance, especially you are Chinese.
As long as they are (1) Chinese, (2) willing to call here home and (3) work hard to EARN a peacful live with rest of us in Canada, I am all for it!