If smash had infinite time and resources, I totally agree. Each character could be a great fighter, for sure.
But so are tons of other characters from tons of other franchises with more than one entry.
Zelda: Impa, Groose, Vaati, Twinrova, Onox, Darunia, etc etc
Fire emblem: Every lord ever, anna, etc.
Almost every single pokemon
Kid icarus: Pandora, Phosphora, viridi, etc
Punch out: King Hippo, great tiger, glass joe, mr sandman, super macho man
Mega man: Proto man, roll, almost every robot master
Like, I love love loved xenoblade, it's in my top 5 JRPGs ever after beating it last night... but it's ONE GAME. The supporting cast was PHENOMENAL, but to add more from xenoblade, when other, long established franchises aren't even getting some of their most requested newcomers (ridley, dixie, masked man, isaac, saki, etc), is a bit much. Not saying they wouldn't be great fighters, but they just don't deserve a chance in the spotlight, imo. I mean, a game with ONE entry would get two spots over other (S)RPGs with ZERO entries? Reyn more deserving than... icaac, than andy?