Smash would definitely be popular without third parties. It already was popular and big before Ultimate or Smash 4.
But I also think the third party additions have been expanding the popularity of Smash, which is natural. When you're bringing other audiences that might not overlap that much with the Nintendo/Smash core audience, your fanbase expands. Not only that, but third party additions usually make bigger headlines, and that's not a jab against first parties, just to be clear. It's just the way it is. Waluigi or to some extent, Isaac, would definitely make some buzz, though.
Thing is, people that aren't necessarily passionate Smash fans, or that maybe aren't that much into Nintendo in general, have been jumping into the Smash hype more than ever in the past few years, and I'd definitely say part of that is thanks to the third party additions. Everyone knows about Smash, but not everyone cares about it. When that happens, it's usually because those folks aren't into Nintendo stuff. But when you start bringing third party characters such as Mega Man, Snake, Cloud, Steve or Sora, that changes. And since Ultimate came out these people, even if they won't buy Smash, usually find exciting the sole idea of "who are they gonna add now?" each time a Smash reveal starts.
Of course, this can be kinda unfortunate for people that mostly cares about first party characters. There are few characters left that would universally reach people outside of the Smash sphere, like Waluigi, Toad, and maybe a few more. But that's pretty much it if you ask me. That doesn't mean that first party characters don't have a chance anymore, of course they're going to keep adding Nintendo characters. But Smash has kinda become an attraction made videogame not only for Nintendo fans, but for fans of videogames in general.
Smash goes bigger, therefore people start expecting bigger and bigger additions. I agree it sucks for a lot of first party characters and I myself still would like to see the likes of Isaac, Dixie Kong, Lyn or Hades from Kid Icarus to be added, they deserve better, but I can't really say I don't understand those people that want to go bigger and bigger.