Banjo being "dead" has little to no influence on him getting in Smash.
Metal Gear is dead and will stay dead,
Sonic is... let's just say he's past his prime,
Namco hasn't been doing anything significant with Pac-man for years,
Megaman literally got resurrected by Smash,
Castlevania hasn't had anything big in years, and Simon specifically hasn't had any recent big role as far as I know,
Cloud clearly got added because of the original Final Fantasy VII, not because of the remake that's not even out yet,
Bayonetta and Persona are current, but they're not exactly mainstream.
This idea that every 3d party franchise featured in Smash must be some extremely big deal, incredibly popular with current gamers is kinda... based on nothing? The only one that may fit the "rule" is Ryu.
And even Ryu is here because of Street Fighter II (his appearance is even based on that game), not because of Street Fighter V.
I kinda feel like the guest characters have always been for passionate gamers, I think they'll stay so, and I think that Banjo certainly fits next to all the others.
This doesn't mean that Nintendo actually went trough with it, though.