Getting some new info coming in from a behind-the-scenes, anonymous source who managed to meet with a pre-E3 Nintendo showcasing as a member of a small audience. Says that big announcements will be made at E3. Apparently there will be many cuts.
Peach will be replaced by Rosalina.
Bowser will be replaced by Bowser Jr.
Ganondorf will be replaced by Demise.
Sheik will be replaced by Impa.
Marth and Ike will be replaced by Lucina and Chrom. They have the exact same movesets as their predecessors.
Lucario will be replaced by Mewtwo, who will in turn be replaced by his X/Y new form.
Pokemon Trainer will return in a different form: controlling the starters from Generation VI. Implied to include one from each stage of evolution. Not yet sure how this will be revealed, since Game Freak has not yet even unveiled the starters' evolutions.
Olimar will be replaced by Captain Charlie. The purple and white Pikmin are allegedly gone, having been replaced by the new rock and winged Pikmin.
Sonic and Snake are both returning, joined by some new third-party additions: Bayonetta, Chris Redfield, and young Heihachi Mishima.
When asked about the status of other veterans, a Nintendo representative suggested that Ness, Ice Climbers, Falco, Mr. Game & Watch, and ROB would be dropped. Additionally, he shot off a few names: specifically, Dillon, Shulk, Hades, Ghirahim, Tempo, Mii, and Monita, which he claimed were all "considered" and/or "possible" inclusions. There was no confirmation of Ridley's inclusion after an eager fan asked. However, the spokesperson tossed around Anthony Higgs from 2010's Metroid: Other M as a "possibility for Metroid fans". When asked about Luigi, he laughed, saying that Mario's brother would appear in the series' starting roster for the first time, citing the Year of Luigi as the reason.
Questioning of some of these choices resulted in the Nintendo representative giving the reasoning for these decisions as "Recency makes decency." When an audience member requested elaboration of this statement, he was told that "[only] games that came out in the last few years matter."
Further news is forthcoming.