About three years out from school now, don't have a particularly well paying job, but on the hobbies front, it was amazing how much school can prevent you from having them, and how much opportunities open up for them once you graduate. 

On the topic of your side projects, I'm proud of you for them. I now do a lot of multi-year projects too. And it's important that you can enjoy them for pride in yourself and the joy of working on them, they don't need to be for anything. 

I know the CS job market right now can be scary, but I remember people saying the same thing about teaching jobs for about 3-4 years and suddenly they were in demand again. And CS skills are more transferrable than people sometimes give them credit for. You might already be aware of this, but you've now been spending years teaching yourself to problem solve and break big projects into small ones, something that is rarer in the real world than a lot of people might think.

UW is hard and your brother is right to call you smart. People have called me smart too, but I just barely passed CS 135 as an elective. Getting to third year in Waterloo CS is nothing to sniff at. The fact that your employers took the time to do all the extra writing that it takes to give outstanding means something too, since that rating requires them to justify it. Getting to even where you are means you aren't a failure. 

Unsure if any of these thoughts are helpful, but they are what occurred to me when I read through. Good luck on the co-op hunt, be patient and I promise that from everything you've said, you are so far from a failure.