One thing that helps Mario is that he actually looks a lot better in his new designs.
It's not so much about trying to make him "cooler" as it feeling like more polish.
When I look at that old mario art he honestly looks kinda wonky to me.
Oh, I agree that new Mario looks a lot better, but I feel the same about Sonic, too. I don't understand what exactly is better about fat stumpy Sonic as opposed to the leaner one, and I've grown up with Sonic games in the 16-Bit generation (I never had Super Mario World on my SNES as a kid, only All-Stars which came with it, and I only played that for Lost Levels cause I already had the first 3 Mario games on my NES). Beyond just scapegoating the modern design for the "downfall" of Sonic games, the hatred for it is just absolutely irrational and bizarre.
And a lot of the things that are said for Sonic's design can be said for Mario - both became taller and leaner, both went 3D, both started talking, both became a lot more expressive in their art, etc.
I also think that while the games following Sonic CD weren't particularly great, they too get way too much hatred. I thought the Adventures games, Heroes, even Shadow the Hedgehog were alright games that had quite a lot of good concepts and ideas. The execution was lacking in some regards (i.e. the absolutely awful camera in Shadow, or the annoying soundbits in Heroes), but they were still fun games. The only Sonic game I would consider truly TRULY shit out of them are Sonic 2006 and Sonic Chronicles (though I haven't gotten around playing any Sonic games since Unleashed, except for Colors which is pretty fun). I also enjoyed the Sonic Riders spin-offs a lot, they were pretty damn cool racers.
I don't consider myself a Sonic fan, as I don't care much for the character(s) or the series. I played those games because I came across them for cheap and/or because they looked good to me (in case of Colors or the Riders games). I can't say that I had bad experiences with them beyond Sonic 06 and Chronicles. And even Sonic 06 has a redeeming quality: it's a glitchfest of massive proportions, so glitching around in the game to do things you're not intended to do is really fun.