I don't understand why you have to choose a character when you go into free play mode. In free play mode,what ever character you pick you also automatically get several other characters. Along with your chosen one and the several other characters they automatically give you. That seems to be good enough to accomplish whatever chapter you are playing. That doesn't make any sense to me at all. I don't know, maybe I'm missing an important fact. I would greatly appreciate it if someone could explain it to me, if in fact there is even anything to explain. THANKS

well, they do that so you can use all sorts of characters at once.
example: say you bought the cheat that allows you to use characters from the first game. you can turn on the cheat and then do free play so you can play as them. it's the same way with the ghost characters