The type of battle system should be Jutsu specific. After all Jutsu means technique. And ninjitsu techniques should feel different from taijutsu techniques.
To that end I suggest a Targeting area that’s size is based on your movement speed Stat.
by entering a taijutsu Stance- you can auto target and tab through multiple targets using the left and right mouse buttons and directional buttons. Simpler to a tekken command.
then for ninjutsu a alpha numerical code that represents hand signs can execute learned ninjitsu and Genjutsu.
This is makes for a good balance because you have to commit to one attack style or the other. Ninjitsu can be fired off dynamically using the soft target system of your targeting area, or from outside it. While taijutsu and Kenjutsu must enter specific stances and hard lock on a target.
The only thing that should be Random regardless of storyline is KKG.
in my opinion KKG should be extended in a sense to Everyone for balance reasons.
to do this there should be 2 types physical KKG which increases 3 stat Caps including Stamina and 2 random others.
and chakra nature KGG- with increased cap to Intelligence/Focus- with 2 additional skills:
So I have 2 things to discuss on this point.
1) Randomizing the stats is only needed if you start as a child born in a selected Village. Basically for story reasons. If you start as an adult then it makes sense to fill in your backstory with skills and stats you have experience in your life until the moment you start the game. If you start as a ninja and not as a child, this could include your primary Nature.
2) as long as chakra fallows the Naruto chakra Lore( - Kagia I Hope) then chakra Nature is simply a skill based on your Focus or Intelligence Stat. And the primary nature is simply the first in the list that you can learn. This list being Random Should be a thing, again only if you start as a child with out Ninja training. If you start As an adult with a Nature there is no reason to Make it random.
But this is a story and Training question. And the path should fit the storyline.