Can we just give Lillum the win, so we can move on?
Wedding dress was my first thought for Kanan to wear as well.
It would match Hanako's memories of the previous festival, but maybe it's too on the nose?
Either way, I think Kanan's outfit won't be lewd. Since the start of this arc my bet was that she's going to win through cuteness. Like when her swimsuit was a frilly one piece, or when her classmates couldn't stand how cute she was when getting embarassed while talking about Kyougi