Tried to make a thread summarizing why theres a demand for the duo, if I wasnt limited to my phone I probably would have gone deeper into it
That's a great summary of how great it would be for Banjo & Kazooie in Smash. For me, it comes down to three factors:
1)
Unique abilities: I have no clue why some would say Banjo & Kazooie don't offer anything new, as they are a duo where each character offers their own unique moves. The games have many hallmarks, but one that is often overlooked is the variety of moves Banjo & Kazooie have across the two main games. Typical moves you'd expect from a platforming character: moves akin to punching, butt stomp, etc. In addition, Kazooie gives the duo both flight and projectiles. The latter allows for even more of a variety if taking Tooie into account, from elemental projectiles, to clockwork Kazooie eggs that can act like Bowser Jr's mechakoopas. Kazooie's Talon Trot can give them speed, while her Flap Flip or shock spring integration can give them height. If anything, there's so much to choose from, Banjo & Kazooie would likely have to be dialed down to be well balanced. You could make five different Smash characters by mix and matching only the moves in their games, without having to use any artistic liberties to make them viable. You don't have to bend over backwards to come up with a viable moveset.
2)
Characters/stages/music: In addition to what makes them great as characters, there's a variety of quirky allies and villains that would have made great assists, bosses and cameos. Though, that's less relevant when it comes to DLC. Their levels are so full of character with tons of variety, any of them would make a great stage--typical elemental levels mixed alongside levels with unique concepts (Clanker's Cavern has you go into a mechanical shark, Click Clock Wood has 4 different versions of the stage for each season). And, of course, Banjo & Kazooie's strong suit, it's amazing soundtrack composed by the legendary Grant Kirkhope.
Any of their songs would be awesome to include.
3)
Popularity/Relevancy/Legacy: Their irrelevancy is often used as a strike against them, except their popularity and legacy overwhelms that. Banjo & Kazooie are typically at the top of the polls, in the West and the East, and have been requested since Melee. Back then, Sakurai called their inclusion, along with 007, "obvious", and only cited legal issues as their problem--an issue that may not be problematic nowadays. Back then, Banjo & Kazooie was one of the top platforming games, their names alongside Mario, Donkey Kong and Link. If they were still owned by Nintendo, their inclusion into Smash would have been guaranteed--if assuming the legal barriers are no longer an issue, there's no reason that would have changed. If anything's changed, their absence from Nintendo has only increased people's desires for Banjo & Kazooie, a story of missed opportunities and redemption. So much so, former Rare devs kickstarted a game inspired by Banjo & Kazooie, setting records in the process. That is irrespective of what you thought of the quality of Yooka-Laylee--there was significant demand, despite Banjo & Kazooie's IP holder's reluctance to do anything with them. Are they as iconic as Mega Man and Pac-Man? No, but more people know of them than most characters requested, or that made it into Smash. Being a Microsoft collaboration of former Nintendo characters enhances the hype.
For me, Banjo & Kazooie is not strictly about nostalgia, despite it being a factor, it's because they're the whole package.