i have yet to underestimate mario's edgeguarding potential. or to say that. but if a mario capes/fludds a floating peach she is gonna go up in the air higher same goes if she gets hit with fludd, even if she is using her up b.
u can cape shuttle loop yes but a skilled player would go under the stage and grab the other ledge (given if u can) but like i said edgeguarding is less efficient in this game due to
A: Floatiness
B: DI is more effective
C: there is less time for occupying a ledge when u roll, get up, attack, or jump from the ledge
Very true, but that doesn't stop characters like MK or ROB from screwing up various recoveries. Edgeguarding is more difficult, and less effective, but still very much alive. Link and toonlink have their tether ledgestall, Mario has the cape stall and FLUDD that kills the spacies recovery, and Kirby has many new options as well.
The cape is much less situational than you think. If a character like MK or Marth try and go beneath the stage to avoid FLUDD or cape edgeguards, that makes them vulnerable to edgehogs. If MK decides to try and switch his recovery up and use his SideB once or twice, Mario can cape it. Edgeguarding anyone never a sure thing, but it's very possible to edgeguard nearly every single character with Mario.
And about your argument with peach,
http://youtube.com/watch?v=U58VuGs-AA8 only need to watch from about 0:00 to 0:38
The purpose of caping in Brawl isn't to deal damage or knock your opponent a certain way vertically (or horizontally most of the time), it's to turn your momentum in the opposite direction. Doing so actually subtracts jumps and shortens their recovery despite its size. Any mario on the boards will agree that Luigi's recovery distance is amongst the best. They'll also argue that it's VERY easy to edgeguard because of the cape (coupled with the FLUDD). It's never a sure thing of course, but you always have the opportunity. Add in the cape ledgestall and Capeglide -> Meteor, and you've got very good edgeguarding.
If I were to cape you during your upB, you're now turned in the opposite direction, and your momentum is going the other way. In order to return, you'd need to sacrifice valuable vertical distance just to return to where you were. You're now moving forward much slower, and are now susceptible to yet another cape, which produces the same result, only on a much higher degree. If I were to cape you again, Fludd you, or go for a spike, there's not much you could do about it because you'd end up sacrificing vertical height. 1 cape is all that's needed to set this in motion.