Rhythm Heaven is in a unique situation where they were a very "Smash 4" pick and even got significant development but were eventually cut. In fact, it's the only full series to have scrapped character data without ever having a character in Smash.
Now with Ultimate it feels like there's an entirely different philosophy of selecting characters that doesn't seem as RH-friendly due to the fact that not many people are asking for a particular RH character to get into smash, despite the popularity of the series.
They didn't get into the DLC of Smash 4 even though they were partially worked on, which hints to me that either they were facing technical difficulties of implementing them or they were deemed too unpopular to sell. The first situation, which I hope is the case, would give them a decent shot in Ultimate since those issues are no longer here. The second is a scary possibility because if they can't get into DLC that focused on selling units, then they can't get in the game focuses on pleasing the most fans possible. And worse, if they can't get into DLC once then they can't get into it again.
As an unrelated take, ever since the Gematsu leak I feel some people in the Smash community have been acting very presumptuous about the RH series. I've seen so many people think it's basically a Wii/DS era game that rode the casual wave and only sold for that reason, or that you can get the full experience of the series just by watching its minigames, or that it's a pitifully easy series that's just casualized rhythm games. All of this is obviously proven wrong just by playing the games but I've seen each of these points being used to express why they don't want a Rhythm Heaven character. I just don't understand it.
The last point, about it being just casual rhythm games, is something that really bothers me. It's true the series is casual compared to the rest of the genre, but so are most Nintendo series. I've talked with a friend about this (Hey Tony!), how it's a very Nintendo take on the genre. Pikmin is way less demanding than most RTS games, Smash has a lower level of entry than most fighting games, and Rhythm Heaven demands less dexterity than most rhythm games, but all of these games also offer experiences and gameplay that isn't really seen anywhere else in the genre.
Anyways I really would be so happy if my precious whiteboard doodle Karate Joe got in. I'd probably never need another video game.