Canary is staking their reputation on the people they add. If there is an issue with the people they add, its on Canary to handle. Self interest is the best motivator to keep a corruptible system honest, and every system is corruptible.
I think you are mistaken here. There are no limits as to how many people he can add to his trust list (which puts them on default trust list). There is no limit as to how many accounts he can have.
There is nothing to stop him from making 1,000 accounts, putting them all on default trust list, giving each-other positive/green trust then giving him trust. Being on default trust essentially makes it impossible to make it appear to an outsider that you have a bad reputation. His reputation may be negatively affected but only by people who regularly follow the politics of bitcointalk.org, for people who do not follow (probably most of the user base) will have no idea other then his trust rating that is available without clicking on any trust details.
He essentially is doing what I described in my 2nd paragraph, except with ~200 people as opposed to 1,000. From what I can tell many/most people who have green trust that are on his trust list have received trust feedback from others that are on his trust list alone; and have given him positive trust feedback as well
He would be removed from default trust. I just want to make sure we are still talking hypothetical, we can't prosecute a guy for something he could possibly do. Theymos could make 50 accounts, give himself fake trust, and then scam someone out of free dancing lessons, but I'm not asking to remove Theymos from default trust yet.