I would think if Western hosted they would take it downtown to Budweiser Gardens (home of the Knights). It has seating capacity of just over 9000, but they can curtain off the upper bowl and bring it down to about 5,000 - this is what they did when the Mustangs played their home games there a few years ago.
Thompson is a big, multi-purpose building that does have the seating capacity to host the University Cup, but it's not ideal because much of the seating is bleachers. It's a unique set-up that was actually pretty innovative when it was built in the mid 70's. There are only about 1000 permanent seats - the rest are bleachers. The rink is surrounded by a track, which allows them to host events during the winter indoor track season. A retractable lower section of bleachers behind the player benches and below the permanent seats is pulled out for every game. On the opposite side of the rink (which is what you can see on the webcasts), there is full set of retractable bleachers. These only ever get pulled out when the Mustangs make it deep into the playoffs and they start getting over 1,200 1,300 people to a game, or when the arena hosts certain special events/tournaments. Current seating capacity at Thompson is about 3,600 - it used to be close to 5,000, but they've done away with the retractable bleachers at the ends of the rink.
Here's a picture. looking accross the ice to the player benches and permanent seats:
http://www.ohlarenaguide.com/picweek/dec1309.jpg