Almost ALL fighters the name of the game is to KO your opponent. Whether it be by a life bar or knocking you opponent out of the arena (or in Brawl's case, through a blast zone).
We're probably not on the same page here. KOs are how you determine the winner or loser, but they are a goal second to dealing damage.
Every hit you perform can be observed as one battle in a massive war. If you can't win battles, you won't win the war. Therefor, the focus of smash should be to win as many battles as possible (land hits and rack damage) and let the KO come naturally. Trying to KO as quickly as possible makes you predictable and open to vulnerability.
People will spam projectiles no matter what. That's just smart play in any game. Making it smarter won't change much. What about KO moves. In Melee, Falcon could spam Knees all he wanted, and the knockback wouldn't decay. Fox could spam usmash and uair. Sheik could spam fair and dsmash. Along with these, it was good for Fox to spam lasers, and for Sheik to spam needles.
I can't argue for the exclusion of Stale Moves in Brawl since much of the game has been balanced around that. But I can argue against them in principal.
Spammy attacks are spammy because of poor balance choices; whatever ties that they have to Stale Moves is secondary to their design. Pika's Thunder still hits even if the rat is knocked off its feet and provides very little safe opportunity to counter it, unlike most character attacks found in the game. Mach Tornado has a massive, high priority hitbox with little startup or ending lag - why? Why did the
master of numbers decide a move with no real vulnerability was a balanced choice for the game? Why does Snake's FTilt have massive reach, priority, damage and KO power? Aren't these attributes suppose to be spread around a character's moveset?
Diminishing KO power "bandaids" spammy moves that KO, but it hurts characters who don't have a spammy KO or reliable damage racking move. In truth, Pika's Thunder should be interrupted if it gets hit, Mach Tornado should have some kind of startup so the player can evade or can't be juggled with it, and Snake's tilt should lose one of its qualities.
Again, many members of the roster don't have a lot of choices of what move they can use, where. There's so much prediction, timing, and understanding of character movesets that goes into every hit that a Smash Attack might be the only move that can win in a given scenario. That makes Diminishing Returns only deep on paper. In game, it's simply a bandaid because no one said "Mr. Sakurai, how exactly would a player counter the tornado?"
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Excluding Stale Moves could be quite harmful to Brawl's balance - I think we're on the same page there. But in general, the way Stale Moves are implemented in Melee/Brawl don't really deter spamming of moves. I think they add about as much depth as looping attacks sucking in a character.