The Song of Roland doesn't really have a single care for sources or plausibility : the defeat of the Frankish rear-guard was a well known event1 for the IXth and Xth centuries, and it was clear that Basques (probably allied to Arabo-Andalusians) attacked and defeated the army with two illustrious dead : Eggihard, the seneschal and Anselm the palatial count. Oh,and Roland duke of the march of Brittany, almost as an afterthought and not in all manuscripts. And while we know a bit about the first two, this is the only mention of Roland we got.Of course, as expected, the Arabo-Andalusian sources are entirely ignored, but that's outside the scope of the question.

While Biblical sources (possibly Classical too^(3)) played an important role into the Frankish imaginary in the XIth century, they were probably not locating Babylon in Mesopotamia, but either in a very rough region enclosed in the Holy Lands, mixing the earlier references with the handful of knowledge they had about the region before the Crusades.Being "emir of Babylon" makes Baligant a pagan ruler from the rough regions of the Holy Lands, and lands where Saracens come from^(3). Basically, he's the rough archetype of a Caliph (would the Franks of the Xth century have known the word).

It is not impossible that Baligant might be a later addition to the epic, and thus Babylon could perhaps be identified as Cairo, known as Babylon by the Crusaders (due to the Babylon fortress)

There's nothing really pointing at an historical inspiration for him, and Xth century Franks would be at loss if they were asked to name but a Caliph of the VIIIth or IXth century : Baligant's role is to be an anti-Charlemagne who would be equally strong, wise and fair; but pagan and this is why Charlemagne wins the duel against the emir and kills him, because he's right and Baligant is wrong.I don't remember a particular etymology being accepted for Baligant ^(4), but eventually it's irrelevant : he's a literary device that could as well be a Frank in how he behaves.

^(1)To the point the author of the Vita Hludovici imperatoris gives us this gem about it "as their names were well-known, I don't need to name them". Someone didn't feel like doing his job apparently.

^(2)There's a mention of a Lycian king coming totally out of the left field; and as the mention of a separate king of Persia, might come from a bit of classical erudition.

^(3) Veiz Baligant, ki aprés tei chevalchet ! Granz sunt les oz qu' il ameinet d' Arabe. (Look at Baligant, riding after you! Great are the armies he led from Arabia!)

^(4) Maybe a variant over Baillir, as in "domining" or from baligaut, insolent.