Why did Moshe choose specifically the Ketores with which to make the test?
Rashi: Because 'The nations of the world', he told them, 'have many religions and many priests, who all 1 gather in one house. We have only one G-d, one Aron, one Torah one Mizbe'ach and one Kohen Gadol - and you, two hundred and fifty men all want the Kehunah Gedolah! I want it too! So here's the most precious service of all - the Ketores 2 , which is more treasured than all the Korbanos, and which contains poison 3 - the poison that killed Nadav and Avihu'. This was Moshe's warning to desist from going ahead with the test. He hoped that that they would do Teshuvah and relent. 4
Ramban #1 (on Pasuk 5) #1: It was his own idea.
Ramban (on Pasuk 5, citing the Ibn Ezra): Refer to 16:4:1:2.
Ramban (on Pasuk 5) #2: It came through Ru'ach ha'Kodesh 5 (Divine Inspiration).
Moshav Zekenim #1 (on Pasuk 7) #1: It was an excuse to delay until tomorrow (refer to 16:5:2:1), for it is offered only [half] in the morning and [half in the] afternoon, and presumably, one may begin only in the morning.
Moshav Zekenim #2 (on Pasuk 7) #2: Primarily, the Kohen Gadol offers it, even though a Drashah is Machshir even a Kohen Hedyot. 6
Others have the text 'who do not all gather ... '.
Moshav Zekenim (in Vayikra 12:8, citing a Midrash): Ketores is the most precious Korban, dearest, since it is not brought to atone for a sin. Olah is for sinful thoughts, Shelamim is for (Bitul) Mitzvas Asei
What are the implications of "Vehayah ha'Ish asher Yivchar bo Hu ha'Kadosh", which otherwise seems obvious?
Rashi and Seforno: He was warning them that the chosen person was already Kadosh, that he was the one who would come out alive and all the others would die! 1
And he stressed this in the hope that they would do Teshuvah, since 'Hashem does not want the Rasha to die' - Yechezkel, 18:32.