We've had a discussion in the past with Zelda characters having their own "Mario Kart" sort of series. I for one am for it, if they don't just make it a Mario Kart clone with just different skinned items. (I mean, come on, imagine a bunch of horse back riding or bird flying with arrows and bombs as items, amirite?)
But no, Toon Link would not work very well within the Mario Kart universe, imo. They just got two different universes going on, y'know? It would've been like putting Kirby into Diddy Kong racing. On paper it would seem ok, but...within the universe already created, it would end up more...silly and out of place, rather than charming.