I like the idea of Madame Masque as the main villain of Season 2. She's a fascinating character and a powerful antagonist who would give Peggy a nice challenge. I also think it's cool to give her a background similar to Hedy Lamarr, which works well with the '40s-era Hollywood setting they're going for.
I also don't think it matters that Masque is usually associated with Iron Man. There's a lot of room for flexibility in MCU adaptations. After all, Blizzard and Blacklash, both traditional Iron Man villains, were instead used as villains on Agents of SHIELD, and they were both used well. Likewise, Season 1 of Agent Carter used Doctor Faustus, who is traditionally a Captain America villain, but he worked quite well as the main villain of Season 1.