Wasn't sure about posting this cause I don't think I do a good job explaining my thoughts, but I will anway.
In the wake of Min Min being announced I've been thinking alot about how characters are decided on for Smash.
I think people tend to compare character popularity too much (need I remind you all of the Banjo vs Steve saga?) when I think that it's probably more a matter of threshholds being met, 3 of them specifically.
1. Popularity: I think this is probably the smallest of the 3, the character needs to be from a fairly well sold game, perhaps less for 1st parties, I wouldn't even put this at a million. No point arguing over 2 characters whose popularity or game sales have some distance between them if they're both over the threshold.
2. Relevance: The character needs to have some sort of future, probably within the next few years, or be relatively recent. As far as we know Banjo only has more merch on the way, but chances are we'll find out next month. This is more to say we won't be seeing Doshin the Giant. (God why isn't he an assist ;_
3. Moveset potential: This is the biggest one, and now more than ever. Min Min really raised the stakes for Pass 2 with her unique moveset and I suspect the pass will be full of characters with higher learning curves.
Another consideration of course is that theres a logical stage/music to come with them, (if they wanted to release characters on their own they would). Elma is an obvious example, as Mira is the real star of the show in XCX and the soundtrack alone would probably be a pleasant surprise for alot of anime fans who are in the dark about XCX.
Also, at launch we only got 2 whole sets of new fighter, stage and music for Ultimate. Only Splatoon and Castlevania could be replaced by Elma or Min Min even, if they wanted to give them a stage. ARMS came out to later, but I think waiting to do Elma later makes sense, since honestly, X on Switch was always likely.
Regarding the mii costume rule/assist trophy rule. I don't think it deconfirms these characters, but I do think it strongly suggests that they don't have plans for them beyond what we've seen already, of course that could change, and that's why we support characters right? Personally, I think the 2nd Xenoblade rep, whoever they are, will ultimately be momentum for the 3rd, and 4th...