I just had a fine schintzel at Rhapsody, on Yonge St. just north of Major Mackenize in Richmond Hill. They have all sorts of other Hungarian specialties there; the traditional schnitzel is truly great (I recommend getting it with the fried potatoes and purple cabbage.) I actually got their assorted platter that came with three types of schnitzel, the original recipe being the best.
The desserts were also decent. It turns out they buy them from a place called the "European Bakery" on Norfinch. I'll have to check that out too. (The restaurant didn't offer my favorite Hungarian dessert, the Hungarian equivalent of a Napolean; perhaps the bakery has it.)
Anyway, this place beats the pants off the mediocre Hungarian places in the Bloor west neighborhood.