I just woke up, looks like there's support for Toad even though he's a negative pick (barely)! I agree that Bowser Jr. will probably be in SSB4 so putting him in would be too risky, leaving an opportunity for Toad open. Not discrediting any talk about him of course, as a smaller faster bowser clone DOES sound neat!
Having read your comments on him, I like the movesets you all came up with, though I want to chime in with a possible moveset of my own:
Toad (as a clone, it would be easier for the Project M Backroom)
Again, his default color should be blue so as to differentiate him from Peach's Toad
Basically he could be the Wolf to Mario's Fox and Luigi's Falco. I know it's not totally accurate (Luigi and Mario have wildly different physics, different side-B's, etc.) but since Mario, Luigi and Toad were all in the New Super Mario Bros. games it can be appropriate. Basically, he'd have a different down-B (can't see him using a tornado attack like M&L) but keep Luigi's side-B. That way, all 3 could have a unique special move. Overall, save for a few of his moves, he'd have the least range but would be the fastest.
...Also, since PMBR wants to make Brawl into Melee with Project M it wouldn't be out of the question to include a second Mario clone like in Melee, as we lost Dr. Mario as a character, now a costume.
Specials:
-I say the down-B could be mushroom spores coming out in front of him as a reference to how Peach uses him. It can be like Squirtle's Bubble attack, only it would be stronger, have a little more startup lag, and cover more range.
-His own version of the fireball would be the ice ball from the newer games, and it could work like Mario's fireball trajectory wise. It could be slower than the fireball but Toad could act out of it quicker even than Mario can, so using them could be more for positioning and startups...like Wolf's new Blaster, now that I think about it.
-Toad's up-B would work like Luigi's up-B in that it only hits once, though it wouldn't be as powerful. It would go a little slower than either bro's jump punches so he wouldn't "pop" like they do. Trajectory wise it could be more diagonally oriented than Mario's. Also it wouldn't be a punch, but the powered up crouch jump from Super Mario Bros. 2. (Second to last row in the picture)
-Toad's version of Luigi's side-B could actually work like Luigi's up-B in that it can't be charged, goes straight forward, does okay damage when it hits. In a reversal of Luigi's up-B, however, it could be stronger the farther into the move you hit the opponent. Kind of like Wario's Shoulder Bash move, though obviously you don't run or jump with it.