MasterOfKnees
Space Pirate
I know SSE, and probably Sonic too, are the culprits behind Mewtwo's absence in Brawl, but like I said he was still judged to not be worth putting as high priority, at least not enough to actually make it into the game. I'm aware that he was more popular than clones because damn, clones were treated as sins back then, but I don't think he was more popular than Sheik, Jigglypuff, unique Ganondorf, Ness or Ice Climbers because he was treated like such a joke, and 4/5 of these characters were also popular due to their gameplay (Ness being the outlier, but at least he was the face of a franchise and had another Smash game under his belt), something Mewtwo certainly wasn't. Mr. Game & Watch is probably right though, people hated this poor guy for some reason.The reason Mewtwo was cut is because of time restraints caused by the SSE taking up 60% of the time, money, resources, and focus on Brawl's development. Mewtwo's design also had many glitches. Both of these heavily contributed to Mewtwo being cut.
Also, Mewtwo was a lot more wanted back in the day than veterans like Young/Toon Link (I was the biggest Toon Link fan in the world, so I know), Ganondorf (yes, I am going that far), Sheik, Jigglypuff (I don't know why), Ness, the Ice Climbers, and Mr. Game & Watch, all of whom returned.
The whole "muh recuncy" "muh sales" "muh retros" "muh hate of clones" movement made it to where Mewtwo was easily a choice everyone could agree on should be back. Ironically, this whole ideaology got shot in the face, as 3 of the cuts were obvious ones (Roy, Pichu, and Dr. Mario), while the 4th in Mewtwo... eh.
Yet, these opinions are still more popular than actually intelligent ones.
The only time where Mewtwo's popularity became evident was when he was suddenly put at risk by the Lucario/Jiggs/Ness slip, and at that point it was of course too late, otherwise detractors were a whole lot more vocal about getting him out of the game than supporters were for getting him into the game. He was basically plagued by the same arguments you see people use against Jigglypuff today, but without the seniority and gameplay appeal to make up for it and instead a bunch of other difficulties plaguing him.