I think it could very well be. However, one thing is that why didn’t Nintendo take action before E3 when Ridley was revealed? Legacy XP was probably the peak of its popularity back then. I think there were people who legitimately believe it was Smash Switch. Either SE pressured Nintendo to take action because of Geno or Nintnedo noticed the mod recently and it features one of its Fighters Pass characters.
That's a Question I asked too when this discussion arose When it was relevant, but I have some theories about this
1. DLC fighter, unlike Base Roster Fighter, have to Sell more on their own Merits as Characters. Base roster Characters come with the Game itself as a Whole Package, So they have that advantage. Plus DLC also doesn't sell as much as the Base game Obviously, as there are many people that just buy the game and that's it. Along with that As DLC continues, usually there are less Purchases overtime because of More Extra costs and that more people become less invested in the game or drop it as time goes on
Because of the DLC Fighters being the main Selling point of the DLC, a Mod having a Potential DLC Fighter is more of a threat than a base game fighter, because the Base Game fighter also comes with the whole game that has different features and stuff that the mod doesn't have
2. There could be Multiple Characters that are Implicated here, and not just One. Ridley was the only Character That was in that Mod that became newly Playable in Ultimate. Perhaps because there's more than 1 Character this time that's Potentially DLC in FP2, that might grind Nintendo's Gears. this theory could also go hand in hand with the first one
3.As you mentioned, A Third Party like Square might have taken notice and asked Nintendo to take it down. This also adds with stuff like the Music Takedowns
4. More Specfically on Geno, If Geno is added as Playable or Premium costume, this will be the first time he has a Full 3D Model ingame. This would be big Deal, so they don't want a Mod having the luxury of being the first