What I'm suggesting is that we move all the current places into the new "Ontario, Places" category pretty much the way they are now (or at least, the way they were the last time I worked on them). The structure should look something like this:
Ontario, Places
Brockville, Ontario
Carleton County, Ontario
Ottawa, Ontario*
Frontenac County, Ontario
Kingston, Ontario*
Kingston, Ontario*
Lanark County, Ontario
Almonte, Ontario
Carleton Place, Ontario
Mississippi Mills, Ontario
Ottawa, Ontario
*
Perth County, Ontario
Smiths Falls, Ontario
†
Toronto, Ontario*
York County, Ontario
Toronto, Ontario*
* Cities that are now independent, but have been part of counties, districts, or regions some time between July 1, 1867 and now will need to be listed twice: once "loose" in [[Category:Ontario, Places]], and then again in the county, district, or region they used to be part of.
† As near as I can tell from Wikipedia, Smiths Falls hasn't been part of Lanark County since 1867, so it would only be listed "loose", and not listed within Lanark County.
So the "Cities, Ontario", "Towns, Ontario", and "Counties, Ontario" categories would not be created. (Neither would categories for Districts, Regions, or Townships.) In my opinion, dividing out categories by the type of municipality adds a whole extra layer of complication that people don't need: they're just trying to add categories to their ancestors' profiles, not figure out Ontario politics (as if that were even possible!)
Similarly, Historic Places, Ontario isn't necessary. Any place that has existed in Ontario since July 1, 1867 (down to the township level, anyway) rightly belongs within the Ontario, Places category. For places that used to exist, but only before 1867, they belong in the Canada West category (or possibly the Upper Canada category), rather than a "Historic Places, Ontario" category.