RE: Iconics in the same city as players.
There's so many fun ways to deal with this. I would (personally) definitely leave them in. You could make the Champions the celebrated heroes that everyone knows and loves, who can do no wrong, and are always at the scene of the crime protecting the city. Or so the people think. In reality, the other supers of the town, including the players, are at those crime scenes, saving everyone's butt, and the Champions are getting all the credit. I'm thinking the normals and especially the media, would much rather just assume that the super-goings-on are all things they are familiar with and can understand.
Meanwhile, living in the shadow of such people, your team will inevitably develop a rivalry of sorts. This is further complicated by the fact that several of the Champions are very likable people. Perhaps there's even a love interest there. The possibilities are endless.
It's clear to me that the people on this board are very adept at coming up with cool ideas. I'm sure nothing above is so original that you're anxiously writing it down. However, I think part of the joy of a published campaign setting like MC is working with what's there, and twisting it to suit my own needs as a GM. After all, it's what your players are doing in your world, right?