I think a good test for which division a character belongs in would be something like, "How quickly can this character definitively end a fight (ie: kill their opponent)?"

People of ridiculous power levels, eg: Sephiroth, who can kill people swiftly, or a maxed DBZ character, who commonly tend to nuke planets. These are obviously megaton class characters.

Heavyweight is something like the shounen heroes who basically bash up against their enemy until they prevail, they pretty much just draw on lots of power until they win. Dealing with a previous example, Dante would go here, because he has multiple levels of power, and can keep ramping it up until he wins.

The Lightweight class will be characters who must fight with skill and cunning, rather than butting heads with their foe like a testosterone drenched football player. To draw on an example from the previous tournament, Sakura, from Cardcaptors, would be a lightweight, not because of her size, but because her powers are based around combining cards and outwitting her opponent.

In my opinion, Megaton will come down to who is a more popular character, as all its participants will probably be able to blow the crap out of whatever opposed them in their original incarnation. Heavyweight will be decided by who has displayed the most powerful move most recently (if characters from ongoing series are used). Lightweight will probably be the most interesting, as it the victory of your favored character will ride upon how well you can present their skills in a debate forum.

There's my three cents. (that's right, my thoughts are worth more than yours, it's one higher!)