Confusion works just fine.
My point is, as Mewtwo you have no reason to approach Kirby. Even when you DO approach as Mewtwo, he can still take advantage of Kirby with his confusion. If Kirby ducks, Mewtwo has a answer.
You stated yourself that Kirby shouldn't be close to Mewtwo to get hit by down tilt's sweet spot. If Kirby can't get in close what is he supposed to do?
Even if Kirby ducks and plays defensively, Mewtwo still has a answer.
As a Kirby user myself, I admit that ducking with Kirby is very good, but it doesn't make Kirby win a MU, especially if your opponent/character can play around it.
Confusion gets you hit by the next D-Tilt.
Here's the thing: unless you power shield the D-Tilt you can only roll backwards. Do anything else and Kirby hits you with the next D-Tilt. Rolling backwards doesn't help you achieve anything either.
Kirby's D-Tilt has as much range as Mewtwo's D-Tilt, he just needs to get close to that range, no closer than that. Kirby's is faster and leads to 30% conversions, Mewtwo's will only deal 4% if it lands.
Any single time Mewtwo dashes you can just duck and either Dash Grab (if you're certain he will shield) or go with the extremely safe D-Tilt which can't be punished unless power shielded. There's 0 need for anything else.
Mewtwo should never be hittig you with Confusion unless you make a mistake. Why are you even shielding at all? There's 0 need for any of that.
I do not think Kirby is a counter to Mewtwo or anything close to that, but I definitely believe he has the advantage. Kirby has one answer that beats out every single approach Mewtwo has and has a legitimate way to approach Mewtwo if need be, albeit it requires patience.
Mewtwo has Shadow Balls (which, before 1.1.3, required Mewtwo to charge them 3/4th of the way to hit Kirby) to force Kirby to approach - that's about it.
Here's my scenario now:
Kirby has the % lead.
This Kirby has good reflexes and can perfect shield any Shadow Ball on reaction.
Kirby sits there ducking, waiting.
As Mewtwo how do you approach?
The only answer I've thought of is the same one as Kirby's. You approach slowly and spacing yourself as best as you can with D-Tilt and Confusion. But the problem is, Mewtwo's conversion out of that is 4% and 9%, plus Confusion lags like a ***** so you will be punished incredibly if the Kirby dodges it.
As I said doable, but who has the advantage there?
I normally resort to good D-Tilt spacing and just baiting punishes from my opponent to get my own punishes. Doing dash dances and then hitting Kirby's foot with an attack if he uses a tilt or just baiting out a grab and then punishing with my own, etc. But this has nothing to do with Mewtwo or Kirby, this a: "Me vs my Opponent" kind of thing. The fact that I have to rely on mindgames to actually play the matchup shows that it isn't exactly an "easy" matchup.
But maybe you have a different solution to this that I haven't thought about. I haven't honestly given it much thought. I would always win against my Kirby friend and I don't know any other Kirby's so it's not like I know every single scenario the matchup has to offer.