I can easily imagine uses for Recall, Ascend and Ultrahand but Fuse honestly stumps me. Is there something you have in mind for it? I just don't see how it can be implemented properly given how items operate in Smash. If it were on Link and he was basically just gluing stuff to the master sword to increase range or add projectiles to his normal swings I can kind of see that work, but how would Rauru make use of it?
Only thing I can think of is if he has a means of summoning Zonai devices and basically having the player make some DIY stage hazards. I do think something like that sounds interesting, but I don't know how well it'd work in practice. Are the devices you get random? Are normal items affected? You have to make a bunch of different combinations for everything. How does the actual building process work?
Fuse I think would work exactly the way you described it, it feels pretty fun and accurate to TotK.
I do think that extending the range of every single move might be a little overkill, as Link uses a sword for most of his attacks. Imagine what would happen if he fuses a Hammer to the Master Sword lol, but Rauru could use a sword for just a few select moves that would also be the ones to make use of Fuse. (I can't remember if Rauru uses a sword at any point during TotK to be honest, but zonai swords exist so maybe it wouldn't be that big of a stretch)
Zonai devices in my mind would work more or less like the Inkling's weapons, where he summons one for some move and then it disappears. Like up smash could be the flamethrower, and stuff like that, and those wouldn't benefit from Fuse.
Okay, while I'm here, here's how I see him working.
Neutral B - Fuse: attach the item you have in your hand to Rauru's sword. That only affects some moves, like I guess fsmash, ftilt, fair.
Side B - Ultrahand: a mix between Confusion and Gravitational Pull. It has some decent range and using it on an item lets you put it in your hands (so you can instantly Fuse it). Maybe you could also grab stuff like Samus's Charge Shot and attach it to your sword lol, that sounds insane.
Up B - Ascend: just a tiny little jump like Witch Twist but with no hitbox, unless of course you hit a platform.
Down B - Recall: basically a counter, you'd make the animation of the attack you countered play in reverse, leaving the opponent open. Use it on projectiles to make them go backwards (while they're still facing frontwards though).
Final smash: that Kamehameha thing he uses against the Moldugas in a cutscene.
Normal attacks would be a mix of sword moves (that make use of Fuse), zonai devices and some punch/kicks for the faster moves.
Something like this. He'd probably be broken but the TotK powers applied to Smash just sound fun. I dunno, I think they fit the kind of chaos that Smash usually thrives in very well.