Well, I think most of us want to see Geno remains as a doll in Smash or more potential games, so I assume if Nintendo does keep him, he would just remain as a doll. Not like Sakurai would surprise us by trasforming Geno into a Luma-ish being.
Not quite sure if the Twink theory works well. As others replied, the main concern is that Nintendo do want to keep every Mario RPG title in an enclosed story and avoid obvious continuation. I assume Geno would have some secondary cameos as a tutor, but not the main party member again (just like Twink) and the story would focus on some other characters like Vivian.
To me, the realstic way to establish Geno's recurring roles in Mario games, so that his existence doesn't need to be explained, is to make him in more games. Rosalina's role in Galaxy was specific, but in later games it doesn't need much explanation when her extistence has been well acknowledged.
Personally, I don't think Geno has game of significance just for his featured game SMRPG being the first Mario RPG title. The "FIFO" rule wouldn't fit everywhere. Such as, Mallow was the actual first party member and participated abig longer than Geno, so in theory he would had been considered first. Like said, fans here support Geno more because he has the potential and likeablity over Mallow.
Secondly, Nintendo have been known to be very biased when it comes to pushing new characters, it often comes out overdone. Rosalina perfectly interprets this case. Since old characters may not always get the treats, Geno is unsurprisingly just one of them, even if we don't talk about the RPG canon issue.
Not being against Geno, but like my past examples said, if Nintendo still wants to give Mario RPG fans some favor despite the loss of Geno's license, the alternative method is to promote characters from M&L and Paper series instead. For now we can only tell that they don't make such plan.