Physically unacceptable solutions for the QM angular equation
We are in principle trying to solve the angular TISE problem$^1$ $$ \vec{\bf L}^2Y~=~\hbar^2\ell(\ell+1)Y, \qquad {\bf L}_zY~=~\hbar m Y, $$ on the unit 2-sphere $\mathbb{S}^2$. However, we are using a "tropical" coordinate system $(\theta,\phi)$ that is singular at the north & south poles $\theta=0,\pi$. Hence, we should strictly speaking also solve the TISE in mathematically well-defined "arctic/antarctic" coordinate neighborhoods of the north & south poles, respectively, and see if we can glue the local solutions together into a global solution on $\mathbb{S}^2$. Not surprisingly$^2$, the "arctic/antarctic" coordinate solutions have no singularities at the poles. So the gluing is not possible if the tropical $(\theta,\phi)$ coordinate solution displays singularities at $\theta=0,\pi$, i.e. such singularities are physically unacceptable.
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$^1$ Here we stick to the differential-geometric formulation using wavefunctions. There is of course also a well-known algebraic formulation using ladder operators, which we will not address here.
We can assume wlog that $\ell\geq 0$. The single-valuedness of the wavefunction $Y$ implies that the constant $m\in\mathbb{Z}$ is an integer. Its range $|m|$ is bounded by $\ell$ for physical reasons. In particular it follows that for fixed $\ell$, the number of independent tropical solutions are finite.
$^2$ After all the $Y$ solutions should maintain $SO(3)$ covariance. Recall that the tropical solutions $Y$ have no singularities or discontinuities at internal points. In fact they are smooth maps in the interior. This can e.g. be derived by a bootstrap argument a la what is done in my Phys.SE answer here. A formulation using weak solutions doesn't change the main conclusion.
An arctic/antarctic solution should then be a linear combination of the finitely many $90^{\circ}$-rotated tropical solutions for the corresponding problem with ${\bf L}_z$ replaced by, say, ${\bf L}_x$. A finite sum cannot develop internal singularities. $\Box$