I think the sail cloth would make a better up special. A gust of wind would shoot link upwards and he would glide slowly to the ground, sort of like Peach. This would greatly aid his recovery.Link should be able to use the beetle and have the whip instead of the clawshot. He could use a skyward strike, and he could have his loft wing help him up when he used an up B, but I think spin attack is better. I think that overall he should stay the same though, just maybe get faster.
The way you say the weapons change with the Down Special reminds me of Sora and Megaman from Super Smash Flash 2.I'd like to see (I know this isn't completely link) Wolf Link & Midna as a character. I wanted this to some extent in the previous one but now I really do want it.
As for Link from SS I see the Skyward Strike becoming a B function with B switching between items/attacks. So it would have the Bow, Skyward Strike, and the Whip. Skyward Strike charges (i.e. think samus), Bow is the same, whip can quasi-grab for either various command grab type throws.
Bside becomes the Beetle and by holding B while flying the Beetle. When you let go off the B button the Beetle drops the bomb.
Bdown is item/attack switch as I mentioned
Bup is still the spin attack
Grabs with Double Clawshot (new throws but different from whip).
That's it for now.