it is a good idea, but as GALOT said, file size limits could be a pain. that, and i'm not sure if we could just switch full models like that. it works with Wisp because the PSA switches between in game graphics, which last until you switch to a new one. maybe textures once Pikazz fully figures out what he's doing with the texture patterns, but i'm not sure about full models. and yes, i do realize a few characters have models they switch between (like Bowser going into his shell), but the extra models are included in with the main character's model file, and just uses the PSA model changer command to go between them. like i said, a good idea, but i don't know how easy it would be to implement. that's just my opinion, though.
and about Knuckle Joe, why not 'borrow' some of the stuff from the old Fighter Kirby PSA? i think it'd work great.