I don't mind this batting order, Hughes at 5 is ok, he scores quickly enough to do ok anywhere in the order.
Khawaja at 3 is ok, he needs time to build a big innings.
Watson is best at opener.
Faulkner is not a test quality allrounder, and is barely ODI quality, his batting looks awkward, and his bowling will be useless on flat pitches.
If they must have 5 bowlers, then just put Haddin at 6, and Johnson at 7.
Johnson's form has been decent enough since his return from injury, as good as anyone, shame he missed out on selection, but the pace group seems strong enough.
But looks like Smith will be in at 6, and deserves to hold on to his spot after doing as well as anyone in India. This could be the "performance based" bit.
And Rogers will have to wait, because Cowan has done enough.