I probably didn't read your earlier post very carefully. That said, yeah, Sakurai can't hide behind that for PP. He wholesale chose that DLC. The rest are on Nintendo. I doubt he could've justified an easy Bonus Character unless they were first party or Nintendo partially owned them(which fit PP and Mewtwo specifically, in that order respectively).
I don't think the idea was simply WTF. It's like he said; not a major character and not a heroic character. That usually applies to Mooks. Geno would've been great, but that requires a lot of extra licensing. Him getting a Spirit this time around is probably the best he could do.
A good point was brought up about relevance. There's no denying that Geno is basically unused, not even slightly in marketing(the only real advantage B&K has. Well, a consistent re-release technically too, but they're in the spotlight/promoted), which gives a slight advantage towards a company willing to license out the character for bigger stuff. The costume in itself is not small by any means like a Spirit is, which is still good, but not good enough, of course.
If SMRPG was coming to the Switch, things might be a bit different. SE in this case would be more than willing to have the character used more often. The fact there was a struggle to get a re-release in general for Download on a console or even the SNES Mini shows how little SE really cares for the particular game. It doesn't help that despite owning the characters, it's not really their world to work with. It's a Nintendo world. This means that it's not much of their own unique stuff that would be getting love. There could be other licensing stuff like how different people own different songs and designs too, that make it more difficult to work with. It'll never probably be revealed why they don't attempt to do much with it, though the fact it's a Mario character means Nintendo always has to be a part of it. This might be the simple reason why; it's a pain to get both together unless there's a severe amount of fan requests, and they're super damn sure(both companies, not just one) it'll easily sell. Mario in itself sells, sure, but Turn-Based RPG's are not as popular as they used to be. Coupled with Paper Mario not doing so hot, and it might not be the best time to strike. There's also things like not being sure how to continue the series(SMRPG2 pretty much fell wayside and became Paper Mario. So what can you do with the ideas now?). I'm sure they can make a grand sequel that'll do well, but are they sure they can pull it off? Us having faith in them isn't going to help if they aren't sure on it.
For a caveat, you've seen many series die like F-Zero. The reason it's not revived is they can't think of something that'll make it fun and accessible, and something that Mario Kart couldn't also do. The extreme speed makes it very difficult to win, even for very good players, so the game can be difficult for some to get into. It's not a beginner friendly game. That makes it harder to revive as is. They can't rely on just a vocal minority saying it should come back. They have to be sure it's worth spending money on to get it revived. You can apply that to a lot of franchises, really. It's simple and a generic way to say it, but it's always about business. Incidentally, SMRPG2 would do better than F-Zero sales-wise by virtue of being Mario.