Tentative Ruleset: (Criticism would be appreciated.)
Double Elimination
Bo3 until Winners, Losers and Grand Finals, that will be Bo5.
2 stocks 5 minutes (Max play time of 15mins of a Bo3 set and 25mins for a Bo5 set is good.)
Custom Moves and Equipment: Illegal
The Mii Fighters will be limited to medium size: 1111, 2222, or 3333.
Palutena will be limited to: 1111, 2222, or 3333
Stages:
-Starter:
BF (Miiverse is only allowed Game 2 and beyond.)
FD (Omega stages are only allowed Game 2 and beyond.)
Smashville
Town & City
Lylat Cruise
-Counter-picks:
Kongo Jungle 64
Skyloft
Halbred
Castle Seige
Whuhu Island
Duck Hunt
Delfino Plaza
Stage Striking:
The players will RPS, the winner will select their character, then the loser will select their character.
Stage striking will then commence with the winner of the RPS striking two stages then the loser selecting two stages until one stage remains. The two players will now lock in their characters, with the loser of the RPS locking in first. The one remaining stage is what will be played on in game 1. The music will be up to the winner of the RPS's discretion.
Stage banning and counter-picking:
In Bo3 the winner on game 1/2 will ban 3 stages and in Bo5 the winner of the previous game will ban 2 stages. The loser of the previous game can counter-pick any stage from the legal stagelist not just the starters. When counter-picking to FD the player may choose any Omega. It will not be chosen by gentlemen agreement. Likewise goes for BF and Miiverse. When banning FD/BF all of the Omega stages will be banned along with FD, same goes for BF and Miiverse. The stage music is to the counter-picker's discretion.
Looks like a working ruleset, but I have some things to point out.
Character selection:
The system that you have favours the loser of the RPS as they have the ability to counterpick a character. To prevent this, both players should choose a character at the same time. If any of the players want to, they can issue a double blind pick, which means that they will both tell a third person which characters they want to use before telling each other. There is also not really a reason to character lock players for the whole set. For game 2 and 3, the winner of the previous game should choose character first with the loser choosing afterwards. This way the matchup doesn't have to be the same for the whole set as the losing player can adjust.
Stage striking:
You said that the winner strikes 2 stages and the loser then strikes 2 stages. This also gives the loser of RPS and advantage as the last strike is much weaker than the first strike. If you strike in the order of 1-2-1 instead of 2-2 it will be more fair as the person with the weakest strike also has the strongest strike. Also, there is a more fair system for stage striking than to have a starter list and a counterpick list. If you have all stages in the same list and strike from the full list, this means that the resulting stage will have a statistically higher chance of being the most fair stage in the matchup. This however, means that you need to add one stage to your list to make the number of stages 13 so that the players can strike 1-2-2-2-2-2-1 instead. If you have access to DLC stages, adding Dreamland 64 to your current stage list would be nice. Also, if your players have a hard time striking from this many stages, they can use the random stage switch screen to take away stages by just clicking on them.
Stock and time:
Most players prefer to play with 3 stock 8 minutes as it gives the match less variance and gives the players more chances.
Custom moves:
If you have the means to do it, you should probably allow custom movesets from
this thread while also allowing players to import their own movesets to slot 9 and 10. This gives players more options while still not being game-breaking (like items or equipment). If you have a 3DS with all custom moves unlocked or you have someone in the area who has, you can transfer the movesets in the community list to all Wii U consoles from the 3DS.