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Hello!

I just unlocked my first extra character. Turns out you can't use them in arcade mode. Only battle mode. I'm hoping this game will get a patch or some DLC that will let you do that. Just an FYI, in case anyone else was wondering.
The arcade mode isn't really balanced around those characters though. So being able to play them there would make little sense. Just imagine simply shooting down everything with the final boss character. That wouldn't work so well. (And I don't think it's even his special attack...haven't tried the Battle Mode yet, despite having bought all the characters already.)
I don't really care if it's not balanced well -- it would extend replayability. Maybe unbalanced/unlockable characters don't earn you coins or the story doesn't react to you in any interesting way; it would still give us something to do with those characters since PvP doesn't really interest me. Castle Crashers had a number of unlockable unique characters that were all playable in the campaign and I was hoping for something similar here.