Regardless of whether the CF-105 could ever have met its projected performance with the fully developed Iroquois engines, killing the program was obviously just a stupid idea, fiscally speaking ... though it seems the whole mess was confused and combined with bitterness just before the destruction of the prototypes was 'ordered' (there seems to be a lot of disagreement over whether that order ever officially went through from the Prime Minister, or if it was some miscommunication ... I know the wrecking crew manager mentions he regrets not hesitating and questioning that order to get absolute confirmation at all levels ... from Avro and the government).
But aside from that and the subsequent coverup/damage control ... and missed opportunities to loan or sell the prototypes to the UK for more testing, there seems to be some other big missed opportunities that don't come up often, or at all.
The CF-105 was a massive aircraft, larger than any other fighter of the era and even the modern F-22 (or YF-23 for that matter) with an internal weapons bay with twice the capacity of the F-105 Thunderchief, 1.5x the F-35, and 2/3 that of the TSR-2. (configurable for 4 1000 lb conventional bombs)
I haven't seen any mention of it being proposed for the nuclear strike role, but it very much seem like it could have been developed in that direction to compete with the later TSR-2, F-111, and A-5. (in fact, it seems closest in overall size and design to the A-5)
Additionally, the basic aerodynamic platform of the CF-105 could have been scaled down to something much more cost effective as a general-purpose fighter using a single engine or a pair of smaller engines. Personally, I think Avro should have licensed the most powerful variants of the Rolls Royce Avon (powering the Lightning, among others). They'd originally been planning to use the Rolls Royce RB.106 and started developing the Iroquois when RR had to cancel development, but the Avon provided an excellent platform and was similar enough in size to Avro's own Orenda to potentially use in-house engines for some prototyping and testing while tooling-up for Avon production and/or waiting for imported engines to arrive for testing. (that's assuming the Orenda itself couldn't have been developed similarly ... but given the existing development of the Avon and its impressive thrust to weight ratio for the time, and given Avro being deep in R&D overhead as it was, licensing royalties seems like a very attractive option)
The iroquois was also optimized for high altitude flight and adapting it to the low-altitude strike role would've taken some doing as well, but that would have fit the timeline for the early 60s demand for such an aircraft, and would have fit well with a cancelled CF-105 production order, but retained slow-paced, low-funding test program or even just shelved and mothballed with renewed interest after the fact. (or testing in the UK as seems likely had the prototypes not been destroyed)
Avro had been forced to focus on CF-105 development over several other in-house projects they'd proposed, so diversifying wasn't an option either, but they seem to have missed the opportunity to at least rehash the old CF-100. The CF-100 seems like it has all the basic features useful for a single-seat ground-attack aircraft with greater range and load carrying capacity than the CF-86s and potentially appealing cost (and shorter take-off or better rough field performance) advantages compared to the CF-101s being purchased as interim multirole fighters. Avro needed something to sell to keep the company afloat, and the CF-100 seems like a pretty flexible aircraft ... potentially even useful in the low-altitude nuclear strike role. (it's rather similar to the Blackburn Buccaneer, though a bit smaller, still in the right size class and bigger than the F-84F) If they kept it in production long enough, or offered retrofits, switching to licensed J52 engines (lighter, more powerful, and more fuel efficient) would make for a pretty solid 60s era transonic attack aircraft. (not too far off from the A-4 or A-6 using similar engines ... and again similar to the Buccaneer, but without the need carrier capability and somewhat lower weight than the Buccaneer or A-6, though probably not the A-4)
With the Avon in production, there's a number of potential engine upgrades or swaps possible with licensed US aircraft, or retrofitted second-hand US aircraft. The J57 of the CF-101s and the J79s of the CF-104s both seem quite relevant, with Avons not being quite as fuel efficient for cruise (though the Mk.302 is really close to the J79), but more efficient in AB/reheat and much lighter. The CF-101 is a very heavy fighter, but cutting between 3 and 4,000 pounds off the empty weight is going to be substantial and greatly improve the thrust to weight ratio, especially dry and almost certainly improve fuel economy in spite of the modest loss in SFC. (the loss in drag due to lower weight should make the difference there) It might even improve dogfighting ability to the point of being closer to the F-4's class, though not as fast, still plenty to challenge Mig 21s on more even ground.
With the CF-104, you've got a lightweight fighter weighed down with the heavy radar equipment of the F-104G (more or less), but you'd increase thrust moderately and cut nearly 1,000 pounds off the empty weight with the Avon engine and recoup some of the flying qualities of the lighter F-104A. (or, putting the same engine on an F-104A, you'd be about 400-500 pounds lighter than the original J79-GE-3 series)
One other interesting possibility would be the FJ-4 Fury adapted to the Avon, but it wouldn't be nearly as fast as any of the above and would be better suited as a fast fighter-bomber, likely supersonic capable when clean though and with much better handling qualities than the F-100. Given Canadair produced the CF-86, it seems to make more sense for them to build it than Avro Canada, though ... so that doesn't help their problems other than keeping the engine works going. (OTOH retrofitting the existing CF-86 fleet with thinner, sleeker wings derived from the FJ-4 while retaining more of the fuselage and existing Orenda engine may have been a more appealing upgrade to keep those relevant in the fighter-bomber role and appeal to the cost-cutting measures of the Conservative government of the period ... the afterburning Orenda 17 intended for the CF-103 also seems like it would've been a cheaper/easier refit than the Avon and wouldn't require changing the intake to increase airflow either, something the Avon would almost certainly require) You'd have something vaguely in the F-100 or Mig 19's class at least ... or, honestly, F-5A for that matter. (maybe not quite Mach 1.3, especially with the Orenda 17, but low supersonic range ... perhaps more like the Super Mystere)
Avro really needed something to keep their factory workers and infrastructure busy, but something cheap enough to be appealing to the powers that be, unlike the CF-105. (the latter, in time, may have piqued the interest of the Brits and Aussies when it came time for a big, supersonic tactical bomber, but that was several years yet off) Granted, had Avro Canada immediately looked towards the Avon after the RB.106 was cancelled, they may have already been planning a scaled-down twin-Avon powered delta wing interceptor/fighter-bomber. (without that foresight, the relatively low cost design philosophy of the F-104 seems like it would've been the go-to 'cheap and small' option at the time, and well suited to the Avon ... and Avro could've been on the ball and snapped up that license before Candair could do so, though perhaps based on the lighter F-104A or perhaps F-104C and not the later, heavier multirole F-104G variant, initially at least)
I suppose a thinner-winged CF-100 with Orenda 17s also would've had some interesting attributes, or simply the Orenda 17s alone, especially for better take-off performance with heavy bomb loads, but I'm not sure how much weight that afterburner added or whether that would be worthwhile for an attack plane. (keep the straight wings in any case, don't complicate matters delving back into the CF-103's development ... drop the high-alt wingtip extensions of the Mk.5 though, not needed for a fighter-bomber, and bring back the 8x M3 .50 cal gun pack for ground strafing missions ... probably better for that role than it had ever been as an interim interceptor armament)
Edit: fixed the mistake of listing the F-104D where I meant F-104G.
Additionally, I'd forgotten about the uprated RM6 (licensed Avon 300 derivative) used in the late model Saab 35 Draken. That just about matches the performance of the J79-GE-19 retrofitted onto F-104As (and used on the F-104S) with slightly lower AB thrust and better dry thrust than the GE engines while totally outperforming the older J
57-P-55 engines of the CF-101s. (had Avro started building earlier Avon 300 marks for an F-104 variant, progressing to further updated to that engine seem feasible, assuming Orenda's engineers didn't develop the Avon further themselves or produce a scaled-down Iroquois, but in any case, an engine retrofit program for the CF-101 fleet should have profited Avro, assuming the Canadian government had still been sold on the initial F-101 deal regardless)
The Saab 35 and Mirage III are both also worth noting as small, cost-effective fighters of the same era, but the F-104 was the smallest, lightest, and almost certainly cheapest to manufacture and maintain, so hard to really beat there until the N-156/F-5 comes around. (of course, the CF-105's scale-model aerodynamic testing could have been used for a small, single-engine Avon powered supersonic delta-wing fighter in the class of the Draken or Mirage III, and avoid licensing overhead altogether ... but again, they seemed forced into focusing on the big, C-104/2 based CF-105 design exclusively, so shortcuts would be needed for alternative short-term production viability)
Plus, Lockheed had been trying to sell the F-104 to pretty much everyone, and they were more likely to offer an appealing deal, even one much earlier than the Canadair license for the F-104G.