That is certainly one heck of a of a blow, and I would suspect a shell splinter or a steel cored AP bullet rather than a normal rifle bullet, from the amount of damage and deformation. If there is "melting" of the steel I suggest only friction with a steel fragment could generate that kind of heat and force.
Could well be a bullet strike from an AP round as one would expect many Germansnipers used such ammunition against sniper posts and probably other trenchworks, if the AP round had better penetration through sandbags etc.
There is an interesting story behind this piece - it was clearly preserved when such a rifle would usually have been scrapped. Did you get any provenance from the seller?
I wouldn't be in a rush to clean or "restore" it, at least not without keeping for possible future examination all the "dirt" removed from it.
The second scope number on the receiver was 334, and I see the first was 168.
The number is important, because this is presumably battle damage and the current state of knowledge on these as you know, is that only about 150 sets ever got to Francein WWI, so already we have an interesting piece of evidence that perhaps that 150 is not correct.
Even then, we have the question of why a scope with such a high number (334) was on a rifle that apparently received battle damage...? A scope that ostensibly should never have left Canadain WWI.
One has to wonder if the balance of the Ross W&S rifles, or some number of them, were not in fact sent to the UKat least for training purposes. It is known that there was at least once Canadian sniper school in the UK and none known in Canada.
And if they were, why would replacements not have been sent to France from that number? From the photos we have, scoped rifles were hardly in generous supply.