Might as well answer some questions.
Q1: The Story of Sonic 06
Ohh man that's a trip. Now there is a reason why there are so many plotholes (and not just because of sloppy writing), you see Sonic 06 was suppose to be a stand alone title originally having all these characters but none of the backstories at some point, but apparently that didn't happen. Honestly there are A LOT of things that could be changed in this story, Elise's Species maybe (at the very least give her actual character and gradual build up), conflict between characters, pointless cameos given reason, some characters not appearing at all, other conflicts, I mean a LOT of stuff could have been changed! Now ILOVEVHS' comment on replacing Elise with Sally is quite a good one but she wouldn't have saved that game alone, though I think Blaze could have fit that role just as well if not better. Really in order to fix the story of Sonic 06 we'd have to rewrite EVERYTHING in the game and keep the bare skeleton of the story as a basis.
Q2: Opinions on Silver and him in 06
I actually really liked Silver, I mean he was a flawed character and didn't just act as an archetype character with one personality trait. Like 06 while his gameplay was interesting and as fun as the game could get it really wasn't freshened out enough. I like his concept but much like Axl from Megaman X7 he really needs a second chance, Axl got his in X8 and he kicked ass! I mean you can still do the whole time travel future angle or have him as a part of Blaze's World with him as her sidekick/best friend or something along the lines of that, I'll say this that duo is pretty interesting if I do say so myself.
Q3: The Babylon Rogues, how would you handle them outside the Rider Series?
I might be an acceptation here but I liked the Riders games (though I never played Free Riders though), the Rogues themselves are a pretty interesting bunch though will probably be limited to Riders and Racing Games. I wouldn't mind if we got to see them in action games as I'd like to see how they would play, or if they could even fly like Speedy from Tails Adventures.