Bayonetta had very special circumstances that facilitated her inclusion (Nintendo straight up funding Bayonetta 2 & 3) and the capability for her moveset to be toned down.
While the Japanese do create media with blood and gore (insensitivity doesn't mean complete revulsion or opposition), it's never excessive nor is it a focus (except in fringe cases) whereas in the case of Mortal Kombat it is both of those. I don't think it's a series Nintendo would want to advertise nor is it a series that could be brought to Smash given how significant of a focus the blood and gore is.
I didn't know that the series wasn't officially localized in Japan, however. That's a significant blow if I've ever heard one.
Except the blood and gore is a major focus. You can say "oh yeah there's so much more to it!" but at the end of the day the increasingly brutal fatalities are a highlight of the series, much more than any other major feature.
And while Nintendo of American and Nintendo of Europe may understand their audiences well, and Nintendo of Japan may consult them (we don't explicitly know if this is the case as far as I'm aware), at the end of the day Nintendo of Japan and Sakurai are the ones calling the shots. I don't imagine Nintendo of Japan even trying for a Mortal Kombat character when there are plenty of other series they can choose from that are actually a thing in Japan.
Yeah, Mortal Kombat isn't banned, so much as it isn't localized for the Japanesse Audience
with that being said, Yes the Blood and Gore is a major focus, and Big Advertising Standpoint of Mortal Kombat, but I'm just saying is that that's not there is to Mortal Kombat, and is not the only Reason Mortal Kombat still lives on today
The Characters (both the MK Characters and Guest Characters), Story Mode, High Production Values, and more are also big things that make Mortal Kombat the success it is today. People don't just like tearing people limb by limb, they love doing it with a Cool Character like Scorpion, or Sub-Zero. They love playing the story mode and paying attention to the lore (for better or for worse) and etc
You could still have Fatalities in Smash. Now they wouldn't be Dismembering Mario or anything like that, but you can still incorporate the more brutal Aspect of Mortal Kombat, kind of like how Ridley is presented as a Brutal Character in Smash. you can also use the campyness that Mortal Kombat has to it's advantage as well. Mortal Kombat isn't serious all the time, it also can have fun at times as well
And as for Nintendo of Japan, I don't think Mortal Kombat would be the First option in mind, but keep in mind that Ed Boon has been a big supporter of Mortal Kombat in Smash. Like you said in your League Paragraph, the support of the 3rd party company goes a long way in securing a Character for Smash. Sakurai even mentions that as a requirement for a 3rd party character. this 3rd party support is also a big Reason Banjo is in the game, because Phil was very supportive of the idea
So even if Nintendo of Japan might not have Mortal Kombat at the top of the list, Ed Boon perhaps starting the conversation could lead to places that could lead to Mortal Kombat characters in Smash. Of course it's not that simple, as you also got to talk to the WB Games higher ups and stuff like that. It also doesn't automatically mean a Character, since Bethesda did probably start the conversation about One of their I.Ps in Smash, and Vault boy is just a Mii costume, with Doomguy no where to be seen
but it's still something that has to be considered and still a very real Possiblity.