This is actually pretty brilliant.
Griselda
and I have actually been throwing around ideas for a hypothetical SMRPG2 as well, that touched on such ideas. Such as another star spirit possessing a doll (Griselda's OC, Geppetto) to actively fight for the Smithy Gang to rebel against the Star Road. He would even have a team of puppet warriors that have designs inspired by Geno. So it's kinda like having other star warriors, but they're all evil. I'll repost the designs if anyone is interested.
As for the idea of there being a greater force mass-producing Smithys to invade other dimensions, I could imagine the Masterminds being a massive Kingdom in another dimension, with a heavy medieval/fantasy theme. After all, if Smithy is just the blacksmith, it makes sense for the authority above him to be a King or Queen of sorts, expanding their kingdom to other dimensions by taking them over with their army of sentient weapons first. Imagine Mario and Co traveling to that kingdom and having to battle mechanized, armored knights and dragons.
Even though the Smithy we know already wears a crown as if he's a king, maybe it can be because he's actually a mass-produced Smithy that defected from the Kingdom and was trying to build his own army in the Mushroom Kingdom to fight back against the kingdom that created him. (For any otaku out there that watched Naruto, it would be just like the whole story of Kaguya being sent by her clan to invade other dimensions and ultimately turning against her own clan, attempting to build an army to fight against them).
Anyway, I'm just rambling ideas at this point and not really connecting them very well. I just really like the idea of the SMRPG community getting together to make a fanmade SMRPG2. If anyone wants to make that happen, you defintiely have artists and idea people here who are willing to contribute. Hell, if Geno doesn't get into Smash, if feel like we ought to pool our energy into that, so that Geno and SMRPG can continue to live on in some way.