Illysia's Masquerade Ball will be a nice test for such a festival.
Not so sure about that. It might be a nice test for how many people are interested in such an event at all...but the Masquerade Ball won't focus solely on music so I think an event putting the main focus on musicians is a good idea. Also from the sound of it this is more about the new music mechanics in game, again something I don't really care about for the Masquerade Ball.
In general...don't waste time with asking what others think about your idea. Just do it. Give them the chance to comment on what you plan then adjust to the comments but don't rely only on their suggestions. This puts you too easily in the situation that you get a lot of good suggestions but no people willing to help working those out..and then end up with a disappointed crowd because you had to ignore so many of the suggested ideas. As a rule of thumb for the Den events we always first tried to make the artists happy..meaning to follow their suggestion and wishes. After all they are the one putting work in such an event. The audience is only secondary.
Find someone you trust to help you with the event. Seriously...this is very important. Doing the main organization of an event alone is a horror...two people are a lot better there.
And one whole day for the music festival is very long (yes, I know...but I also said the masquerade ball is way too long just was overruled
). I understand why you want a whole day but this also means there will be long periods of nothing happening at all. Maybe it would be better to do four smaller events on the same day, each an hour long. This way it should be still possible to have at least one of those events accessible from every timezone but also can make sure there are some musicians who actually play something.
