My choice for replacement would have been Bruno. He doesn't really seem to say anything of substance.
Arlene and Craig are both very critical but Arlene gives advice that helps the contestants who take on board her comments, and, in the last series, I noticed that Craig usually tried to finish his comments with something positive.
Len is the only Ballroom/Latin expert on the panel so I guess I'd keep him on the panel but I didn't like the way he kept losing it with the other judges last year; it came across as very unprofessional. Like the OP, I think he needs to decide between DWTS and SCD and commit to one or the other but not try to do both at the same time.