This kind of thing was in Project M, and to be honest, while it was fun, it was also kind of annoying. Switching characters each stock means that if you make a mistake early on and wind up with the wrong character, you've basically already lost at least two stocks. Plus, switching each KO means you can only use that one character for that one stock. Which means if you want to switch, you have to SD and waste a stock just to get who you want. Pokemon Trainer automatically switches Pokemon each stock anyway and as they are now, you can switch in the middle of a stock for whoever fits the current situation, like if you need to recover or have broken the foe's shield and want Charizard's KO moves over Squirtle's combos right there. And seriously, tell me with complete sincerity that Charizard didn't have trouble with comboing in Smash 4 and couldn't have used Squirtle's help in that department.
Even if you only use one Pokemon, while you don't have a down special, that's exactly one less move than the rest of the roster. Losing ONE move doesn't matter a huge amount. And as others have said, the mid-stock switching is truer to Pokemon's home series mechanics. Smash celebrates every single franchise in it by making every character feel as close to their home series as possible while still having fun movesets for a fighting game. Red/Leaf, Squirtle, Ivysaur, and Charizard together represent the franchise's very core, namely the relationship between Pokemon and their Trainers (seen in their victory poses, especially the three unique "affection" ones where the trainer hugs and pets their Pokemon), as well as representing the switching mechanics in Pokemon and how each member of your team fulfills a different role. Fighting alone, Squirtle, Ivysaur, and Charizard only really represent their movesets. That's potentially great for Competitive play, but it loses part of the spirit of the franchise, especially when there's six other solo Pokemon already on the roster.
Sure, they represent the three Starter Pokemon of the Kanto region, but they do that regardless of whether they're on their own or with their Trainer. Ultimately, there's nothing the three Pokemon can do on their own that they can't do better as a team.
Also I absolutely love their victory animations with the Trainer and that alone is honestly enough for me to prefer them together.