Government of Canada website link posted above: "The wound was mitigated because the bayonet blade was deflected off her sternum but a serious scar remains."
I can only see three interpretations of the above scenario, and in each one the bayonet is inneffective.
1) The soldier intended to use lethal force against the woman.
The bayonet failed because he was to able to pierce her sternum.
2) The woman deliberately cut herself on the bayonet as propaganda.
She saw the reporters nearby, and put herself in a situation to be cut, but not too badly, so that she'd have a reason to cry foul to the media and portray government response to the Oka Crisis as unjust and oppressive. This could potentially explain why the bayonet had not been driven into her chest with the lethal aggression you might expect. In this case, the bayonet failed because instead of diffusing the situation, it escalated it. The negative publicity undermined government efforts to keep the situation under control.
3) The soldier intended to use his bayonet in a non-lethal manner.
In this case, the bayonet failed for the same reasons as in scenario 2. While the soldier was able to neutralize a belligerent non-lethally, the negative publicity it caused did more harm then good.
Now consider alternatives to the bayonet in an Aid to Civil Power situation:
In the first scenario, the soldier should have gone right to .556. If it were, in fact a lethal force encounter, he should have used the most effective weapon at his disposal.
In the second scenario, a baton would have been much more effective. You can't smash your head on someone else's baton as easily as you can cut yourself on someone else's bayonet, so therefore you'd have a much more difficult time spinning the media to suit your goals.
In the third scenario, a baton would have again been more effective. A baton is much more suited to non-lethal force because it is much more difficult to cause permanent or life-threatening harm. By the public, batons are seen as a much more legitimate form of civil law enforcement as they have been used by police services for hundreds (thousands?) of years.