What about DUI ? As far as I know it is 50-50 percent chance to get the permanent residency.
I wonder if I can reapply after a denial, ?
Again, it depends on your plans, and why you want permanent residency.
Is permanent residency required for citizenship? Good question; my guess is no.
How often do you plan to leave Uruguay? If you do the "my Canadian health care is sacred" thing, or want to travel (even to Buenos Aires, close by) so as to avoid staying in country more than 180 contiguous days, then you can spend your time here on a tourist visa. If you don't plan to travel at all, then just overstay your visa, and if you need to leave you pay a small fine.
Meanwhile, while your residency is "en tramite" (1-4 years), every time you leave you need to have permission to return ("Permiso de reingreso"), getting which can be from painless to total pain in the ass, depending on your resourcefulness.
Lack of residency here is not the big deal it is in North America (including Mexico). However, it would make opening a bank account and getting a local driver's license problematic (the latter not an issue if you can renew in Canada without appearing in person, or if you plan to return to renew in person).