KO punch mechanics aside, what you say isn't exactly wrong for the most part. His moves could be a little bit weaker, but his ground speed and attack speed are already pretty much the fastest in the game. I really don't think they need to be even faster. His airspeed could go either way. On one hand, he's a boxer and completely ground based so air speed can go hand in hand with poor air game. But on the other hand he is speedy so his airspeed could also be pretty fast. What would you do to give each of his hits a defined use though? Just give each punch a very specific launch angle? Maybe a punch or two that are shield breakers? Each attack having a defined use is actually sort of hard to interpret into smash.
And as he is now the stamina bar(and by that I actually mean the Hearts) would be a pretty balanced fit. You start with 20, lose a heart everytime you hit a guard with a single attack or jab combo, dodging through attacks regains a heart and if they run out you cant attack for 5 seconds. It probably wouldn't affect him very much except for maybe forcing people to be a little less reckless with just spamming attacks and making people run away for 5 seconds every time their hearts run out. He'd be far from the worst.
Either way, what they did to Little Mac as is, is pretty great. 418
He'd be far from the worst? lolno. With that mechanic of yours, he would succeed Ganon for having no advantageous or even matchups, he would be the worst in the series and likely get his own tier for himself at the bottom just for that. You are encouraging shield-grab spam, pls no. Mac players can't just be shelded and have to run away every few seconds then lose a stock because you don't like him as is. I deal with enough kirbys and grapplers every day, I'm considering dropping Mac because of the extreme prejudice against him, the spam and hate i deal with on GFAQs for being a notorious Mac main, and the fact that one slipup costs you the game. Uphill battles don't exist, you just lose if you die first. There needs to be some reward in that system.
Like you start with 10/20, but dodging increases them by 2, and maxing out increases your ground game, air game, recovery (Like alot), and weight for 10 seconds, while burning out has the effect of 5 second shield break that can't be mashed out of and gives you super armor(no, not heavy armor) so they just rack damage on you. Still a horrible, nonbeneficial system, but not nearly as bad as yours.
And yes he needs to be faster if we're making him weaker. At least his aerials. If underwhelming power is gonna be his new weakness, speed is going to be his new strength, and his air game will have to be sped up and powered drastically. Like make every aerial stronger in knockback but weaker in damage, allow them to be slightly less endlaggy, or linger longer. Or be actually goddamm useful!
Every special mechanic in the game has a trade-off, not just pure benefit(except KO Punch). Monado has drawbacks and benefits, while the latter coming of on top. Luma is just all good absorbing hits and possesing the best projectile in th e game(Shooting star bit is basically Falco laser 4* better), the only drawbacks being if he dies, you have 2-3 useless specials. Pikmin have no drawback because Pikmin pluck, and recovery is a non issue, while i'm falling i ditch some of my Pikmin. Oil Panic's nerf is a double edged sword, allowing a max or forty-something% max damage, but allowing crap alike PIkawatch and Megwatch to exist.
K.O Punch is all benefit, i get that. That doesn't mean we nerf an already struggling character by taking away everything good about him, giving him more bad mechanics, and leaving him to rot. We rebealance him by lowering the armor on his smashes, and inproving his recovery, making his f-tilt and dash attack less spammy, give all his air attacks uses. K.O Punch only raises by giving hits, but you can no longer lose it form tumble, rather from an extra 50% damage taken(and being warned too), as well as thirding the damage requirement to 100%. 300% is just absurd, nobody does that much and lives. Now not only is Little Mac a better, the complaints cease, and he maintains a much better ground game then air game. This is assuming none of the above happens.
Like Thor said, the hate about Mac is because his benefits make noob tactics better like smash and tilt spam, drawbacks are about stuff noobs suck at like recovery, follow-ups and aerials. So he caters to noobs, and therefore deserves to be worse than Brawl Ganon? No. Just no. Being noob-friendly is usually a bad thing, as your character is stale and pretty bad in a competetie scene. MAc sucks. He is mid->midlow tier, everybody knows how to deal with him, he is hard countered by Shiek(Same way ROB went down for being hard countered by Metagame-Nerf, going form top tier to low tier). He isn't going to get better. And your nerfs aren't going to help.
tl;dr your mechanic is horrible, he needs an overhaul or fix, not nerfs. Little Mac isn't that great, and with some help could become a better but less unbalanced character.