The contract you posted from the Dub was an old one that has been revised, the current language is much closer to the OHLs. Portland screwed up a lot of things for the league as a whole, plus the whole employee issue is putting more pressure on them.
I agree the working for a small amount of reimbursement is not a great benefit, but the argument for all of these teams is that they provide near NHL level training and coaching to the kids, provide and facilitate education during and after their WHL careers, and exposure to professional league scouts.
The WHL would be foolish not to bring the player to court. If they let Byram out, they are opening a door for all the other players opting to play elsewhere. Suddenly Krebs, Cozens, Jarvis, Zary, etc can all go play elsewhere. For a few +1 players who are not quite NHL level, the NHL would rather have them in the AHL or Europe. We've seen the Euros on loan to the CHL clubs already getting pushed to Euro pro leagues as teams prefer that. For +2 players, pretty much any real prospect would be pushed to play elsewhere. Those two years are vitally important to CHL clubs and their existence, or at least that is their argument for the relationship as it stands with the NHL. If they start letting these players go elsewhere, the NHL is going to (rightfully, and arguably finally) push for the NHL/CHL agreement to be amended to lower ages. CHL teams stand that this is a fundamental business problem for them, and they couldn't exist business wise without those players. Which, if true, means certain CHL teams start to fold and the best development leagues in the world start to produce less and less talent. That is a problem for all of hockey, again, if you believe the CHL teams on that. The second they give in on any player they have rights over out, this house of cards starts to crumble. Now I am on the side that the agreements need changed and the CHL exaggerates the extent of the real issue. I would love for this whole system to be changed and amended all the way through, but the CHL is going to fight tooth and nail to maintain their status.
Substantial is a tricky definition. If Byram went to Sweden and blew his knee out, he'd miss the whole WHL season. That would be substantial to Vancouver.
Fundamentally, I agree that Byram should be allowed to go. I would say the CHL (and NCAA) need to make some drastic changes to their model. I'd like to see players actually paid a salary and more contractual freedom to play elsewhere. With where these organizations stand on this issue, they are going to fight any of those changes with their full force. Even if it makes sense for every other party, as long as the CHL maintains their stance, they will fight.