I've been lurking for the past couple of days and I have been exited at the possibility of Banjo and Kazooie joining Smash Bros. My first Rare game was Banjo Kazooie and Donkey Kong 64 in the year 2005 and to be honest I hated both games. I eventually got Diddy Kong Racing and hated that too. It wasn't until Nicktoons UK did a marathon of Viva Piñata episodes and a competition for an Xbox 360 with the game did I realise Rare was now owned by Microsoft and I was shocked cause I thought Rare was defunctioned. This made me want to revisit the games and they had grown on me. It also made me interested in the Xbox brand. Now I don't believe Microsoft era Rare is bad as people say, in fact, in my opinion I consider 360 Rare just as good as N64 Rare. They still had their magic back then, it's just I believe people were sour that Microsoft had snatched Rare from Nintendo and in turn snatched Rare from the fans. Microsoft at the time of the acquisition thought that the Xbox and the gaming industry was going to be like how it was during the late 90s with mascot platformers, but then a lot of mature games were becoming huge successes and Rare didn't know which market to cater to.
I think just because BK are owned by Microsoft, it doesn't mean that they can't be in Smash Bros or even have their own games on Nintendo platforms. Also the excuse that having BK in Smash will not benefit Nintendo is just a fallacy. Cloud Strife is in Smash Bros and FFVII is still PS4 exclusive. Nintendo and Microsoft can come to some sort of agreement on their inclusion and their is a lot of fan demand for them.
Now I for one refuse to believe that Bayonetta was the most popular choice in Europe. I wanted Bayonetta to be in the base rosta for WiiU and 3DS but I remember an article claiming that she couldn't be in cause she is too over sexualised, so I just accepted it at that. I really thought BK would have made it in, how ever I have a theory. The demand for BK to be in Super Smash Bros prompted Microsoft to try and restart the soured relationship with Nintendo. Mojang was purchased at the time so Microsoft wanted to test the waters with Minecraft on the WiiU because it is very popular with kids. They probably want to see if they can put their ips on rival consoles without hurting the Xbox brand. Nintendo has been more cooperative with Microsoft this time round and even allowed Nintendo Minecraft to use the Xbox Live infrastructure. It seems that Microsoft has been getting more involved with Nintendo recently, so it's very likely that there has been discussions about Smash Bros.
My characters who I've wanted to be in Smash Bros the most are Banjo Kazooie, Master Chief, Dig Dug, Arcade Bunny, Impa (OOT) and Cranky Kong.