Some general thoughts: This typing pair is really, really potent defensively. The base typing naturally answers mons like Oger/Wogerpon, Caribolt, Raging Bolt, Walking Wake, some Zamazenta, Hydrapple, Revenankh, and probably quite a lot of other mons depending on stat bias, vulnerability to burn (offensive stat bias), etc. Checking a mon only after transforming is not perfect obviously, but the pirouette form is great into mons like Darkrai, Obliteryx, Hoopa-U, Kyurem, special Valiant, Pecharunt, etc.
None of the initial form's weaknesses are retained on transformation (in fact 3/4 become resists/immunities), and the same applies to the reverse direction. We do have a few awkward matchups (Hemo for example), but we're not struggling on the defensive end.
Because of this defensive potency, I'm inclined to think an offensive-leaning ability isn't a bad idea. Offensively we have a situation where of our 3 stabs, we could easily get away with running just 1 of them. This makes coverage very lucrative (a few typings that come to mind are fire, water, ground, maybe electric and fighting), and abilities that boost said coverage in some way are probably pretty good. I am a little nervous about an overly offensively potent base form since that might encourage just slapping stuff instead of transforming, so that's something to be careful with. I think the balance right now is somewhat base form heavy, so like with Ramnarok, we should be afraid to give the pirouette form serious stats to encourage transformation.
Anyway, here are some ability thoughts:
Punk Rock is pretty high on my list because of boosting a sound-based CAP song, and has some really solid coverage hits while also allowing us to check Chromera sort of as quz pointed out.
Wandering Spirit does have some funny interactions. It's inherently inconsistent and also dependent on the opponent's actions which is always a downside, but maybe that's fine. There is some synergy with our current "stay in for a while by flipping all your weaknesses" package.
Misty Surge is definitely usable since we can pretty freely forgo dragon STAB as a fairy, but I think it might go too far. It's already very difficult for the opponent to properly hit us sometimes, so I think retaining status as counterplay might not be a bad thing.
Other status solves feel similar to me. I think they're fine overall, but I feel they encourage pretty passive gameplay (we can pretty freely sit on the field, but what are we doing while we're there? That's a problem that has yet to be solved).
Steely Spirit IMO this shifts us in the direction of an offensive transformation rather than a defensive one, so I'm not a big fan.
Flame Body / Static feel very potent to me at first glance, and they help solve the "what value are we getting when we're on the field" thing. I can see us extracting a lot of value out of these with our transformation. They also encourage the defensive aspect of the transformation since they require tanking hits. They're very annoying and arguably too much but yolo. Static is probably better in a vacuum unless we want to deliberately keep Fire types as answers which is probably valid.
Flare Boost / Guts feel a bit at odds with our build. They do solve the passivity issue while helping us into some status mons, but trying to make a defensive transformation work on a guy that's losing health every turn really makes me think of those old flame orb marvel scale Milotic sets that were kind of ass. I do also worry that an overly threatening base form discourages transformation so a 1.5* boost is a bit much to me.
Water Bubble for STAB+ is kinda funny since it compliments Fairy reasonably well, but I prefer Punk Rock for a more reasonable pseudo-STAB build since it's also directly encouraging the transformation move.
Tinted Lens to me means you click the strong Fairy move / Draco and don't look back or transform.
Speed Boost and Stamina were mentioned on Discord and I think they're both pretty interesting. One of the things that sets this defensive transformation apart from just switching to a defensive pivot is that you can keep your stat boosts while "pivoting". Speed benefits both forms pretty nicely since it lets you get a transformation off, and Stamina synergizes with our build too since you can transform to resist a hit while grabbing a boost. Speed Boost often implies another form of boosting, but I do think that could actually work for us fairly well if we want to go that route. Anyway, I think both of these are pretty valid.
Edit @ below: Pressure is sick