Interestingly, the trend was actually to move away from established canon. When the series was first pitched (by Origin) it was proposed as a sort of 'Wing Commander III Babies' that would literally move WC3's dramatis personae into the storyline of Secret Missions 2. So you would literally have young Blair, Maniac, Cobra, Vaquero, Rachel, etc. (it's not a coincidence that so many of the character ages in Victory Streak are the same or close; this started early!) Universal moved away from that (which was probably where you heard about Paladin!), and instead used it as the framework to create new characters and situations. Thus, Cobra became Payback, Vaquero became Grunt, Rachel became Maya, the Firekkans became the Dolosians and so on. Hobbes is the most interesting one, because he is rewritten as Gharal.. which is actually an anagram for Ralgha. Gharal would have become a traitor in season 2... but it's unclear whether or not he would have 'become' Ralgha. (The earlier character designs actually used the straight WC3 outfits; there's even a big animation bug in Walking Wounded where they use the earlier footage.) I think the end product is a better idea, but it sure would've been fun having Ginger Lynn voice a children's cartoon character...
As for Season 2, the biggest difference would have been that it 'went wide' and showed us more of the war. We'd meet Blair's father, an anti-war senator, we'd see the Confederation government... and we'd have more interludes on the Kilrathi side, see Thrakhath's war council. If you're familiar with Exo-Squad, it'd have been the same sort of jump in scope between the two seasons. (With far more episodes produced in the second... possibly loosely patterned after the events of Wing Commander 2 moved forward.)