If the police seize control of the university, they can monitor / filter all traffic. The whole city can go dark.
I don't think that is true at all - at least not for the last 15 years.
Almost everyone co-located in HK is in a totally different physical location than the University (such as iAdvantage or HKCOLO, near LOHAS Park) and have independent connections outbound to the world.
We, for instance, are physically located inside HKCOLO and have a direct connection to he.net in Fremont, CA. If you traceroute rsync.net in Hong Kong, you typically don't leave he.net.
I'm not sure how seizure (or even shutdown) of the University would affect infrastructure at iAdvantage or HKCOLO or Dyxian, etc.
I feel that the monitoring of traffic is unlikely. To clarify, this is not about taking a pro-China side, but more on technical aspect. Most modern web traffic happens in some form of encryption (most commonly https/ssl) and some are end-to-end encrypted (various messenger apps). Filtering is certainly possible/likely (just like the great firewall), but monitoring seems difficult (in the case of https traffic) or impossible (in the case of end-to-end encryption... hopefully impossible at least?). There'd have to be hardware-level/low-level trojans planted in individual devices to make that possible. Which isn't to say it's unlikely (from what we've heard in the past few years), but only that it's unlikely to happen with just a hostage of HKIX.
https://tw.news.yahoo.com/%E6%B8%AF%E8%AD%A6%E6%94%BB%E4%B8%...
Of course explicitly controlling it and manipulating it is a bit different.
This is probably a better article than the Wikipedia:
https://www.scmp.com/news/hong-kong/article/1269773/hong-kon...
https://tw.news.yahoo.com/%E6%B8%AF%E8%AD%A6%E6%94%BB%E4%B8%...
HN shouldn't be fueling this kind of unsubstantiated speculation.