Many of us Ontarians shorten it and use T.O. "I was in T.O. today." "Oh... what were you doing in 'Torono'?"

That is exactly correct. It's also prevalent in the Mid-West American Accent. It's just how we say it, it's still spelled "Toronto". It also happens in words like "counter" (said like "couner") and "disintegrate" (said like "disinegrate").

This is how "Toronto" is pronounced by Torontonians. It's the Toronto accent. You can hear the way it's pronounced here: https://www.youtube.com/watch?v=Pa-88Nt1aTs#t=1m17s