But, I think the concern about precedent setting is valid

I'd say the problem here is this isn't precedent-setting. It's not a rule change, it's an arbitrary process making an arbitrary decision based on the arbitrary opinion of the city's chief planner. Daycares should be by right but because of this insane ad hoc process we have no clear guidance on what's allowed where. Just because one guy opens a day care in point grey doesn't mean the next guy can open a nuclear plant.