Combat is a big part of Minecraft survival, and Sakurai could certainly give Steve a few blocks to place and get resources from to quickly make a tool upgrade or armor.
Minecraft 1.9 was literally "The Combat Update."
I hope you realize what you're saying is also an opinion, you also don't know if it'd be extremely difficult or easy. Minecraft already has plenty of stuff Steve can use in a moveset, and really they could just give him a building move and have resources drop from opponents and count that as crafting since he can craft small walls to pound opponents against before they break. Building is basically structure crafting.
Steve can't have his name change, because the name "Steve" is tied directly to his skin, same with Alex. Yes, players can change the skin, but then they're no longer Steve, yet Steve is still pushed as the main face alongside Alex and the Creeper.
And where are you getting your figures from in regards to people who don't care? Are you even part of the community? Because yes, there are people who don't care, but there's still tons of thousands of fans that do or at least like/love the idea of him in Smash, and like using him in builds, fanart, and animations. There's even a popular "Life of Steve and Alex" animation series.
I don't know how many times I have to say the same frickin stuff over and over before y'all realize Steve is actually popular, no matter how much y'all hate him.
For some reason you REALLY seem to take this a bit personal. You are mostly keeping yourself contained, but there is some verbiage in your posts that show you are perhaps a bit too emotionally invested in this.
Of course it's my opinion. I've barely ever played MC. I really don't care about the game. It's just a time-sink sandbox kinda game with a retro style that is now marketed to kids over it's original demographic. I've seen what other people have done for movesets, and I see what is wrong with it. You can say there was a 'combat update' but is the main gameplay fighting? No: it's exploring generated worlds and gathering resources to craft things. Yes, there IS fighting, but combat and survival is there in a lesser form and is not the main focus of MineCraft.
You mentioned that before, and I admitted he is popular. Being popular =/= should be a character in Smash. It tends to lead to that...eventually...
sometimes. But just because thousands of people who think Steve should be in Smash say he should doesn't mean he's realizable. There are a lot of Smash clones out there, but I haven't really seen one integrate Steve despite his popularity. Obviously Sakurai and his team can do better than indie devs who probably make no money, but what if they also think it's a difficult tasks to make Steve unique while also balance AND properly represent MineCraft?
Personally, if you ask me, a crafting mechanic could work out fine. A building mechanic would be a problem though. Most serious fighting games don't involve true terrain on the battlefield in the sense of walls that can block movement. Imagine trying to balance what Steve could build with his Down-B? What blocks can he use? How many blocks can he have at a time? How long do they stay active when placed? How many hits do they take? Can you roll through them? Can you use them to trap your opponent? Can you opponent(s) interact with them as well, or only Steve? Can he mine them for items or for a unique mechanic like gaining materials to craft with?
I'm sure there are many more balancing questions that would come to the mind of a developer. Many fans will come up with movesets but not consider balancing. It's easy to say 'Steve is possible and here is a moveset I made up for him' without taking in the time to think about channel times, frame data, invincibility, recovery, hit boxes, hurt boxes...etc etc. Then you HAVE to make sure the mechanic represents MineCraft well, so Steve couldn't really do anything he can't in MC. Very few liberties could be taken in terms of bending things for his moveset.
So that I'm not seeming constantly negative, I'll give you an idea of what I think is a good place to start: Kragg from Rivals of Aether.
He can summon a single stone cube that he can pick up and throw or manipulate in other ways and some of his moves work differntly when interacting with it. However, your opponent can break it and the shards can hit you, acting as and attack and giving them an opening. I can't remember if they can pick it up too, been a while since I played. I would start with that idea (or maybe Shovel Knight in RoA because I think he can do something similar? Again, not sure, I played it without DLC) and try to build Steve's building mechanic off of that as a basic foundation.
EDIT: To clarify about a building mechanic being a problem, I don't mean it's not possible, but that it would be difficult to do correctly. Remember: it would have to represent MC correctly, be unique, be fun AND be balanced fairly. That is a bit of a tall order. Not impossible, but I'm confident it would take a lot of time to get it right.