Was the paint near the gunwales really badly weathered/faded/chalked? Paint is a superb UV blocker, confining damage just to the exposed surface. If the paint in those areas was still in decent shape and present, then your problem wasn't likely caused by UV damage. Moisture getting down between the canvas and gunwales would be a more likely cause. Enamel has a limited tolerance for having moisture trapped against it and some of the stuff that grows in damp places like that can actually eat both wood and natural fiber fabrics and weaken them substantially.
This is one of those instances where typical wooden canoe construction tends to differ from typical wooden boat construction. On a wooden boat that will be left outside, the gunwale-to-hull connection would usually be bedded to seal out moisture. If not, the end result is usually rot of some sort. Most canoe builders don't bed these joints since the typical use (and storage) for the canoe doesn't expose it to a constant supply of moisture.
There is certainly nothing wrong with providing good UV protection for any boat. It will make your paint and varnish last longer and look better down the road, but unless the paint itself had really deteriorated, I really doubt it's to blame here.
As far as covers go, acrylic or polyester marine canvas (Sunbrella, Odyssey, etc.) will last the longest, block UV best and maintain water protection with a certain amount of breathability (which may often be far more important than keeping it completely dry). However, my own experience with the "canoe-in-a-bag" scenario (even a really good bag as I have access to all the fancy yacht canvas I could ever want) has been pretty miserable - leading to a lot of refinish work. I will never again stick a wooden canoe inside a bag unless I'm positive that that bag is vapor tight and it's sealed shut on a very dry day. If I had to leave one outside, I'd fabricate some sort of awning or shed that didn't touch the boat and had a lot of airflow around it.
I think the elephant in the room here is that it's an absolutely gorgeous boat and a fine and valuable historic example of canoe building of the day. Like it or not, the truth is that if you leave it outside, it's going to get trashed, and there is little you can do to prevent it. It would be a real shame to see that happen and aside from building some sort of really serious shelter for it, it is going to happen. Weather exposure will deteriorate fiberglass canoes, plastic canoes and even aluminum canoes. It has no trouble destroying wood and canvas canoes. I must admit that when I saw the picture of that boat and read that you plan to keep it outside, my first thought was "This guy's nuts!" -- and I'm probably not the only one who had that reaction (though most folks on this forum tend to think in a more tactful manner
). That boat deserves a bit of pampering, especially during the times when you're not using it and it's just waiting there for you. Do it right and it will be around for another 107 years. There are a lot of options for awnings, sheds, etc. that could do the job, but I don't believe any sort of bag or boat cover is really going to be the best answer.
