I find this statement quite... troubling. Sheik exploits disadvantaged opponents very hard. Nevermind the fact that she can get 30+ damage conversions at low percents, she has top notch edge guarding and plenty of kill setups (which I'm sure work quite well on M2 due to his low weight). Bouncing Fish alone makes being in a bad spot against her scary. Mewtwo isn't exactly easy to edge guard but having an awkward double jump and teleport recovery (which isn't terribly difficult to 2 frame) don't make it "impossible." Even when he does find his way to the ledge, he still has to get back on the stage which Sheik makes quite difficult. I can't imagine M2's large frame helps him in this scenario.
I'm more curious about how these character's tools interact, now necessarily what their gameplans are. For example, is bouncing fish a good answer to shadow ball if Sheik gets a read? Is M2's d-tilt very useful in this MU or can Sheik consistently use fair and such to get around it? How well does M2 exploit Sheik in disadvantage (I.E. can he effectively chase Bouncing Fish)? What is M2's best response to Needles? Those are the kinds of things that, to me, define a matchup. Not whether a stray hit can kill at high percents.
She really doesn't have "plenty of kill set-ups" any more-- no guaranteed or 50/50 set-ups at kill percents (which mewtwo has, btw from moves that are excellent neutral tools), she needs BF punishes on reads or edge-guarding shenanigans. She does get great combos at low percent, which means the value of her winning neutral decays as the match goes on once her long combo strings don't work, precisely because most of her kills come from edge-guarding.
Mewtwo is very hard to edge-guard, he has a relatively non-linear recovery and awkward aerial movement -- not to mention a fast fair which challenges and beats most of Sheik's aerial options (making her advantage state risky when she starts losing her true combos due to high %). Furthermore while sheik has no trouble winning in neutral past combo percents, she rarely gets a kill off of it, and she has to constantly respect the threat of fair, u-throw, nair confirms, or an up-smash which start killing at crazy early percents if Mewtwo has appreciable rage.
To your specific questions:
Mewtwo's best response to needle camping is to just outrange sheik and force an approach with shadow-ball, since shadow-ball has longer range and Mewtwo gets tons of frame-traps/mix-ups off of a weak SB hit. Bouncyfish can punish shadowball at a specific range, miss the range and you're dead to an up-smash. Sheik can't use fair with abandon because Mewtwo's fair outranges it and kills at medium percents (part of my point) and does damage equal to three of hers (plus he gets combos out of it at low %'s), and d-tilt out ranges all her options in neutral and confirms into pretty sick combo strings.
You're missing the point here, it's not "whether or not a stray hit can kill at high %'s" It's whether at high percents, single, reliable neutral victories start leading to kills when Sheik is at low %'s -- which is very different. Sheik trades with fair, she's dead. Mewtwo doesn't have a bad neutral she can exploit, d-tilt and fair are powerful zoning tools which both lead to kill confirms and the more she damages him the better his neutral victories become and the worse hers do. Nair is more or less safe to throw out with proper DI and leads to kills, grabs lead to kills. We're not talking about a character like bowser needing to land a forward smash, the moves Mewtwo can kill with are good options in neutral or punishes to her only decent kill options at thase %'s and therefore Sheik really has to start playing carefully even if she's been winning the majority of neutral exchanges earlier on in the match, the threat Mewtwo poses later on controls her.
Watch Aba vs. K9, Aba vs. Mr. R's reset set, you can literally see what I'm talking about as the games progress. Mr. R just can't freaking do anything if Aba has lived to 100% except run around and try to camp late game and fish for a read because he is too afraid of trading with a fair, getting bopped by a nair punish into up-smash, getting killed by a throw, etc.