I have never played a deck that used character cards that werent the character card for the deck. do you play them as foundations, assets, or actions?

During your turn you may play a character card as a form into your card pool. At the end of the turn, when you clear the card from your card pool you check to see if the character is the same name as the character you already have in play. If that is the case, the new card fuses with the old granting you the new character's symbols and abilities in addition to the ones you already had. If the character is a different character from the one you have already, the character played into the card pool is automatically discarded.

You may also play a character card as a block at +0M. Character cards are nice because they are the only +0M blocks in the game.

If you would like to change characters mid-game there is a card called "Here Comes a New Challenger" that will do it.

Baranor said:

*STAMP*

also, after the first game you can change who your starting character is with any other character in your deck (but I'm pretty sure in a tournament they make you lead off with whatever character you registered as your starter)

For example, sometimes to avoid diversity people have a strong popular character in their sideboard (like new chunli) and switch to that character after the first game, this is called sandbagging (though I have no idea why)

Sandbagging means not doing your best and tricking them into getting overconfident and then basically ripping them a new one. Not saying you didn't know that, but that's basically what they mean here with a good character in the sideboard.