I picked Dragaux because I think he is the most memorable character from the game, and while I don't think that boxart is the end all- particularly for a new series that has to explain what it is solely through the boxart... Dragaux is the focal point. He has the biggest personality of the game (by far), and also the most unique silhouette, which we know used to be of huge consideration for the game, particularly in Smash 3DS.
I also think it would be easy for Dragaux to do anything the Adventurer does, though not vice versa (short of sucking and propelling... which would be an odd focal point for Adventurer, making its gameplay nothing like the point of the series). Moveset wise- some sort of flex (maybe a disable, or a buff), a crate throw, utilizing his workout equipment buds, and even various exercises. I could in fact see him using the Ring itself for certain moves, even if that is against the game a bit.
Also, as far as actually being practical for sales- big bro dragon, or redundant looking average human who holds a driving wheel?
I don't know enough of the Balloon Fight music, but I do know it has several games, and that it has enough music, particularly with remixes as an option.
I think that it could be a moving stage, with lots of items that fly in (some for attacks, some as gifts), with various other Balloon Fighters coming down to attack. Considering Sonic has courses that are... just about identical, as did Starfox and Metroid for some time, I think there are more possibilities than may first seem available.
As for moveset, though you didn't ask, it would revolve around keeping your balloons afloat. The stats of the fighter would change fully based on having 2, 1, or 0 balloons. One special would be inflate, I think the up special would just be a parachute (in case of losing all balloons in air... it only gives as much upward propulsion as a single Ice Climber up special... but it allows a gentle glide down). The other specials would probably have to have liberties taken- such as a big balloon pop, the return of the flipper (which would make sense for creating on screen, aerial havoc), a gift present, balloons that fly up and block your opponent, etc.