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Thanks, that was REALLY good answer and I liked your post.You do have to be very close, and precise. A good rule of thumb is the your opponent should be basically intersecting Lucario's palm, during the first quarter second (maybe half second?) of the move. Treat it like a normal grab, in that sense. A good way to practice is to go into training mode, set the dummy opponent to "jump" in the pause menu, and try snatching them out of the air. Start with large characters like Bowser, and once you've got that down, move on to smaller and smaller characters until you feel confident.
As for Usmashing into it, I can't really comment. I don't use that particular tactic often.