First of all, I would like to clarify that I have both read comics and played MK for years.
I think this idea could work well story-wise, but I just don't think the two sets of characters will mix well in game-play.
The MK characters are vicious and constantly kill their enemies in grusome manners. The majority of DC heroes, while formidable warriors, refuse to even consider killing an option. Plenty of villains and lesser known characters would fit in better, but they do not make an iconic roster.
As much as I enjoyed playing the Marvel vs. Capcom games, the one thing tha never quit bugging me was that Capcom kept using the license to make more vs. games, instead of developing a more expansive and exculsive Marvel fighting game.
And I might as well add here that I don't see any fighting game featuring an iconic DC roster really working for one reason: it would have to include both Batman and Superman. The other DC heroes (Wonder Woman, Flash, Green Lantern, ect...) can arguably fit in the middle: they're powerful enough to hold their own against Superman, while still somewhat vulnruable to Batman's attacks. But Batman vs. Superman is just too one sided. Yes, Batman has defeated Superman in the past, but that was because he was smart enough to engage Superman dirrectly in physical combat. That option is not available in MK.
As for magic and the lack of yellow sun light weakening Superman in the game, not having access to his powers takes the whole point out of playing Superman. It would be like if you couldn't use Sub-Zero's freezing powers or Scorpion's harpoon.
Any thoughts...?