Can snowplows legally back onto the highway or is it a situation of where they turn a blind eye?

Short answer: Yes.

Long answer, here's section 157 of the Highway Traffic Act which outlines backing on a highway:

Backing prohibited, speed limit over 80 k.p.h.

157. (1) No driver of a vehicle shall back the vehicle upon the roadway or shoulder of any highway divided by a median strip on which the speed limit is in excess of 80 kilometres per hour. R.S.O. 1990, c. H.8, s. 157 (1); 2005, c. 26, Sched. A, s. 27.

Exception to subs. (1)

(2) Subsection (1) does not apply to,

(a) the driver of an ambulance or fire department vehicle as defined in section 61;

(b) the driver of a police department or Ministry vehicle;

(c) a person attempting to render assistance to another person; or

(d) the driver of a road service vehicle, if the movement is made in safety.

Source: http://www.e-laws.gov.on.ca/html/statut ... .htm#BK234

Did a collision occur?