I've tried to respond to this twice, and lost it, so here goes again...
I think classic hits would do well whether it was called "Magic" or not. I actually think the association with the former 96.1 would be beneficial. The difference, though, would be that the new "Magic" wouldn't have a playlist much like the old one - the new one would play mostly 70s, with some 60s and 80s. The old one played mostly 60s with some early-mid 70s. I think the pros of the name outweigh the cons. CC has classic hits stations named "Magic" in Cleveland, Jacksonville, and VA Beach. Heck, a lot of them are just "Oldies ___" (Milwaukee, Portland, St. Louis, Columbus, Seattle). Boring.
Just a comment: I was at UNCC on Friday and at the softball field, music by the Jackson 5 was playing. It was followed by something that people on the AC board will argue was not hot AC, so it wasn't radio. But does anyone in the market play the Jackson 5?