1) Ultimately only your grade 12 marks matter. Yes while you might be able to get an early admissions offer from SOME schools for SOME programs (and Waterloo Engineering is not one of them), you will never be denied admission due to your grade 11 marks.
2) Even if your grade 11 marks were to be considered, provided they were obtained at a ministry approved and inspected school, it does not matter that it is considered an "alternative" school. What the people you have been talking to are referencing is the policy some schools/programs have with regards to courses taken in summer or night school (and even in those situations those policies would be waived in the event you have a compelling reason for you taking courses outside of day school which you would).
3) Stop listening to "a lot of people" and get your information directly from the admissions personnel at the schools you wish to attend.