Kitsune are basically like trickster-ish natural-lycanthrope were-foxes.......yeaaahhh...... I too have read Champions of Kamigawa: Outlaw recently, and it does portray the kitsune kinda neatly. Kitsune in that M:TG plotline are relatively similar to those in oriental legends. Though, in the book I just mentioned, the kitsune are represented as being more or less superior to humans in every way except strength and maybe toughness. The book represents them as being tremendously fleet of foot, and able to run and fight for incredibly long periods, skilled in illusion magic, extremely agile and well-coordinated, wise and very long-lived, able to sense and communicate with spirits, and able to sense/analyze the auras of creatures, spirits, places, and magical forces.
Legend isn't quite so......extreme, far as I know. Regardless, kitsune are an ancient people, and they're at least a bit in tune with nature or the spirit world. They are kami (spirits) themselves, though corporeal and at least somewhat mortal (either long-lived and quick-healing, or just plain immortal, or bound to woodlands like a dryad or whatnot). They're friendly but don't like having visitors in their own homelands, they like being secretive and sneaky, and they're mischevious humanoids, with more or less all of them capable of some minor illusions at least (if not greater illusions), though few if any are capable of damaging illusions (i.e. Sharpear's burning will'o'wisp trick in the book CoM:O). Kitsune are traditionally portrayed as being women who change into foxes (or vice versa), but in oriental-themed RPGs and such there are usually male kitsune too. In some games/stories they're portrayed as simply human/fox hybrids in appearance, such as in the Champions of Kamigawa trilogy/sets. Rokugan has kitsune fox-folk for instance, one of the ancient races before the time of Man, with few remaining in hiding during the time of Rokugan's empire. Shippo could be considered a kitsune, in InuYasha, though he's a runt and such, but nonetheless he does demonstrate quite a few tricks of illusion (some of it even corporeal, though not strong enough to hurt much or to carry any significant load); Shippo could even change shape a bit, though he didn't grow any stronger in those forms.
You can use Fox Hengeyokai from Oriental Adventures (3E) to represent them fairly well, I suppose. Hengeyokai in 3E OA are shapechangers with a +1 ECL/LA, though I personally don't think they deserve it..... They have a specific human form, a specific animal form, and a hybrid form. They can change between forms a few times per day, plus extra times based on their level. The hybrid form is the only one in which they're similar to the core races in power; their human form has no human racial traits (no bonus feat, extra skill points, etc.), and their animal form is just a normal animal of Tiny size or less, though they have one or two minor racial abilities that allow them to communicate or something in the animal form. Their hybrid form has a minor ability score adjustment and a few minor traits like their animal form (i.e. a slow flight speed for those with bird animal/hybrid forms). Aside from their minor shapechanging, Hengeyokai have only one or two other more-minor racial traits of little use, and in all their forms they have a -2 Wisdom adjustment. Overall, they didn't strike me as deserving any sort of Level Adjustment.
If you make a custom Kitsune race for D&D based somewhat on the Kitsune in Champions of Kamigawa, here's a few suggestions: ability adjustments should be something like -2 Str, +6 Dex, +2 Wis, +2 Cha; should be of the Humanoid type, appearing similar to humans but fair of skin and face, with foxlike features to their visage and body (don't remember if they have tails or not); Medium-sized; base speed 60 feet; +8 racial bonus on Jump checks and no limit on jumping height/distance; Balance, Jump, Perform (Singing), and Tumble always count as class skills; Endurance and Great Fortitude both as racial bonus feats; extra +4 racial bonus on checks noted in the Endurance feat; natural healing rate is doubled; chance to stabilize each round when at negative hit points is 30% instead of 10%; +4 racial bonus on saving throws and Spot checks against Illusion effects; +2 racial bonus to the save and Spot DC of any Illusion effects they produce themselves through spells, spell-like abilities, and supernatural abilities; all Kitsune have 1 effective level of Sorcerer for purposes of spellcasting ability only, which stacks with any actual levels of Sorcerer, giving Kitsune initially spells known and per day as per a 1st-level Sorcerer, but the Kitsune must choose only spells of the Divination and/or Illusion schools for their spells known with this effective Sorcerer level; favored class is either Bard or Ranger, character's choice.