No Midna was separate character in twilight princes i believe anouma (sorry for the spelling) in a interview he has already worked on the designs for sheik and ganandorf with sakurai
Just because designs have been sent in to Sakurai does NOT mean that those designs will be included in the final product. I dont know how many times we have to say this. If i sent a really bad design for a shoe made on paint and sent it into Nike, would it be, guarenteed, produced? Didnt think so.
Also yes, Midna WAS a seperate 'character', but if you payed attention to the storyline, you would understand that Zelda sacraficed her spiritual being in order for Minda to survive ~ an attack attack of pure light/in Hyrule.
Both Midna and Zelda where ONE 'being' for a large portion of the story.
Of course the idea of Midna being Zelda's transformation astounds me, and i dont take it seriously for a second. Most likely, a redesign of Shiek or the inclusion of 'Cloaked Zelda' would be the transformation.
Why? At what other point do you see Zelda in Twilight Warped Hyrule when she isnt Cloaked?