The correct balanced equation for the single replacement reaction of magnesium with aluminum oxide (Al2O3) is option C:
\[ 3\text{Mg} + \text{Al}_2\text{O}_3 \rightarrow 3\text{MgO} + 2\text{Al} \]
In this reaction, magnesium displaces aluminum from aluminum oxide, producing magnesium oxide (MgO) and aluminum (Al). Therefore, option C accurately reflects the stoichiometry of the reaction.