Ah yes, expanding the franchise to include a villain from a game already in smash. What a deep cut.
"Filling the emptiness" of FF7 content in base wasn't the reason why Sephiroth got chosen. If you think nintendo does things like that to give people a more "complete" package you're mistaken. Nintendo doesn't really care, because what they could get is what they could get. They went for more FF7 because FF7 was still ripe for the picking with Remake, not to give us more FF7 content. That was only a side effect of them getting Sephiroth in.
Even if you think Kazuya disproves the idea that mii costumes in DLC deconfirm, there's still not much reason to think many of the franchises you listed, such as monster hunter, should be getting in. It seems painfully obvious that Monster Hunter's just gonna be settling with the content it has now, with its assist trophy, world of light boss and map, two songs, array of spirits, and three mii costumes. Feels like MH is definitively gone, no matter how you slice it.
As for Crash, Rayman, etc, I doubt that having successful games on the platform necessarily creates interest in Nintendo's eyes.
I uh... didn't say anything about Sephiroth being a deep cut?
As I say in the next message, I do think Nintendo and Sakurai would have recognized some of the frustrations with FF's content and pushed for more. But the broader point of my post, bringing in a second FF character was not indicative of them "not wanting to expand" the crossover because Sephiroth both filled in a major gap in content that was very noticeable AND because Sephiroth was an incredibly iconic villain of a massively popular and influential game that brought the first third party villain in a playable form to Smash. You tried to use Sephiroth as some sort of gotcha for them running out of third party choices when that's just blatantly not the case and myself and others have pointed to why Sephiroth would be included independently of them "running out of viable third parties".
Do I think Monster Hunter is actually coming? Not particularly at this venue, but it was just again in the broader service of my point as to what third parties were on the table that would still have relevance to Nintendo and that they could have an interest in. Monster Hunter has just had too many "almost" moments, but it's technically as much on the table as any other franchise that got additional content in this pass that many of us thought would be out with an earlier appearance of that franchise in a smaller role.
I'm also very confused as to why you're turning around and saying that Crash and Rayman don't make since because they "have successful games on the platform" when you just made a point as to FF7 Remake being important to Sephiroth in the same exact post. What exactly is the point you're trying to make with that comment and how does it not immediately get kind of weakened by the inclusions of Tekken and Persona that have next to nothing to do with Nintendo's stuff to begin with? They've been willing to pick franchises they are less directly interested in and they've also picked franchises they've very clearly had a more vested interest or crossover appeal with in regards to the likes of Minecraft and Dragon Quest. I feel like that indicates that they are pretty open to a lot of third party stuff across the spectrum, and even if we have 17 characters from third parties at this point, there's a LOT of untapped stuff Nintendo would potentially have an interest in or just recognize as great for crossover appeal. A lot of stuff may not be in a great position for Challenger Pack 11, but beyond that and in the future, there's plenty of avenues Smash could go and could have gone had they had a Pass 3 in regards to "third parties Nintendo would likely be interested in".
If you ask me Sephiroth wasn't picked to complete FF7's representation or because of the Remake. Sephiroth was added because he's one of the most iconic gaming characters, and everything else was at best another feather in his cap.
If they really wanted to ride the wave of FF7R's hype they would have released Seph as FP6 where he'd be closest to its release (and serve a function similar to Joker as the opening act). The fact that they didn't suggests to me that the remake wasn't really a deciding factor.
As for the content, I think it's worth remembering that that's licensed after the character given what Sakurai has disclosed. They could have gotten the rights to Sephiroth and only two songs to come with him for all they knew so that must not have been a deciding factor. Plus, it's clearly not a dealbreaker, given the music Hero got.
I do think that Nintendo was aware of how unhappy people were with Final Fantasy content in base game though and in general. If they were aware enough to make costumes for Dragonborn, Dante, and Shantae with a nod to fan requests, I think that knowing FF had basically nothing at least influenced Nintendo somewhat even if it wasn't the sole deciding factor in Sephiroth's inclusion. I think a lot of factors made Sephiroth the Square Enix pick in general for Pass 2 and I think while FF7 Remake probably had nothing to do with it on Nintendo's side, I'd say it probably didn't take much for Square Enix to approve Sephiroth when he was back in a huge starring role again in Remake.
I think, at the very least, Nintendo and Sakurai did approach Sqaure Enix hoping for a bit more this go around with Final Fantasy based upon how limited the prior offerings were with Cloud. Would it have been a deal breaker? Almost assuredly not, but I think it was something they were more mindful of this time (also Hero's offerings weren't that bad music wise, they were MIDIs without remixes, but not even Square Enix can consistently get anything else out of Sugiyama lol).