I'd honestly replace the Homing Attack with the Ring Attack Sonic has in Sonic Battle, complete with the option to not actually have to follow through with the attack, similar to the Spin Dashes. The Ring would do no damage by itself to compensate, or, at the very most, cause damage without hitstun like Fox's Lasers
But fat chance of that happening, so just give Sonic the option to cancel Homing Attack with an airdodge, or the ability the hold the charge up phase longer by holding the B button, and I'd be fine with it.