Well, being that Sonic is fighting an evil King Arthur, I doubt they'll use Le Fey or Mordred.
I dunno.
One "obligatory storyline twist" that I think could be in mind, is that the one who is posing as Arthur/Black Knight is NOT Arthur, but rather Mordred, defaming Arthur. Mordred and Morgan were always trying to take the Kingdom for themselves in the storylore, so why not here too?
That would make perfect sense for Calibur, the Sword, to be either Arthur himself (turned into the sword), or some other agent acting on the real one's behalf. After all, who better to supposedly teach Sonic about all there is to being a knight, than the "once and true king" himself?
It's some what contrived, but hey, like I said on RPM before the crash, it's the best plot twist that I could imagine S. Team's storywriters coming up with, if they wanted to keep things at least some what interesting.
Werehog not withstanding, I don't think ideas is Sonic Team's problem. They've had plenty of good ones. What they lack is polish, which comes with, as you said, lack of time.
I would still argue that they/modern Sonic Team lack focus, more often than not.
If they would do more to stay with a few great ideas that they can develop, rather than be all over the place with a lot of ideas that even THEY seem to have problems imagining where to go with them, they likely wouldn't have had the problems that they would have in the likes of Sonic 06 (and Nights 2, for that matter).
A "lack of time" excuse starts to really lose its "impact", once its plain to see that the ideas that they pose...aren't all that they're cracked up to be, no matter how they try to convey it. I mean, for instance...who's bright idea was to make it so Shadow would drive cars (again) in 06?
Still, I think probably the biggest problem with Sonic, above all else, is that Sonic Team themselves are probably tired of being stuck making his games. If Sega really can't afford to "retire" the brand (or at least, give him an extended break), then how about giving some new blood a chance at him?
I mean, for crying out loud, Sega! You relatively recently got the likes of Treasure back on your good side. PUT THEM TO USE on these types of projects, which could serve to make you and them money, so that you both could stand to fund your own, individual projects! Plus, a Treasure-made Sonic game could stand to be something of greatness...