Sonic would need to always have a way of breaking bricks because of the low hang in 1-2, unless he can break bricks from rolling into a ball after running. Still, though, every character needs to have a way to reach all of the power-ups, and the Star in 1-2 can't be reached if you can't break the bricks or hit it from the side/above. I'd suggest he always has the Insta-Shield and just gets the Spin Dash when he gets a Mushroom. Drowning in SMBC is incredibly impractical and simply cannot be included. The only instances in which the character goes underwater are those in which the character is underwater for the entirety of the stage. This is simply one of those things that cannot be transferred over into SMBC. Interestingly, I would say given the new power-up system (as well as the inclusion of Firebar immunity granted by the Varia Suit), giving Sonic at least Firebar immunity when using the Fire Shield is completely reasonable. Also, given how easily power-ups can be switched out by grabbing other power-ups, there is no guarantee Sonic would have the Fire Shield in every castle stage anyway.