It's hard to comment without knowing which market this is? Are you referring to an actual station (sounds a bit like WJNO if Randi is still "local"; can't think of what else it would be). Depending on what the heritage station is doing (presumably a "Newsradio", "when you need to know", "your official weather station" gig), I'd plan accordingly. The market you're in also could dictate some things - some cities are more friendly than others and wouldn't warm up to certain kinds of shows. There are a lot of factors involved.
To start, if you're in the south, I'd pick up Dave Ramsey. If you're elsewhere, I'd pick up Dr. Laura. Run one of them against Rush. I'd be open to doing politics against Rush if it were someone entertaining like Beck or Stephanie Miller (although I wouldn't mix ideologies, especially as only the second talk station).
As much as I think getting the morning audience is overrated when it comes to being a second or their tier station, your best bet would be to get a very compelling morning show. You mentioned doing news in the morning - isn't the heritage station doing that? Most of the top talkers in the markets you mention do a morning news hybrid with a lot of information and service elements. It's the second tier stations like yours that bring in the yellers and screamers who have no idea what they're talking about and eventually BECOME #1. So while I am all in favor of an information-centric morning show, don't do it if your competition is doing the same thing. Take advantage of the fact that "Morning News" shows are tune-in, get info, tune-out shows, and build your own local show by focusing on higher TSL. This is why you do talk. Keep traffic to a minimum - it's a waste of time in most cases, people ignore it or tune out, and the heritage station only does it so much to cement their image as the go-to station.
Plus, if the morning guy grabs peoples' attention, he will direct them to your local midday host (yes, that is what I have decided... a local midday host). You COULD run Laura Ingraham 9-noon, but (IMHO) a mediocre national show against a good one doesn't usually work, especially if the better show is on the station that already has a 7 share. If you can afford a decent midday host, do it.
Again, it depends on your market, your budget, your nighttime signal (and when it becomes a factor) as to whether you should have a local PMD host. I'd try and poach Hannity. If you have a decent enough signal and they think you have potential, it could work. Am I right Phil? You'd probably have to keep Levin 6-8 or at least run him before midnight. I would pick up Savage, live or two hours delayed. After 7pm, does anybody really listen? Just put something halfway compelling on. I might also grab Bill O'Reilly for 11pm-1am or something just to give yourselves a selling point with people - everyone knows Bill O'Reilly. It's a crutch until you get some numbers and establish yourself.
Don't get Ed Schultz. CC heritage stations have tried him amidst their mostly RW lineups and he hasn't worked. He won't work for you either. Nothing against the guy, but Phil is right on this point. Savage isn't available until 6pm ET, which judging by your competitor is the time zone you're in. And as for sports talk... if you're the underdog, forget it. Focus on people who want to talk. People who can't get enough of talk about politics or an occassional advice show. Chances are your nighttime signal isn't huge, so you won't have any big sports teams coming after you. Don't take any of the smaller sports teams unless the pay you a lot of money, which they won't. Focus on being talk 24/7, and when your competitor(s) have PBP on, you can image yourself as having "breaking news, even during a ballgame". Play this up. But, in reality, I think sports talk shows work on heritage stations that have done them for eons and people have their dials glued there and will always come back. They won't be as forgiving with you.
