I don't think he's deserving. That was one game. Granted, a good game, but he's nowhere near iconic enough. Not to mention third party issues. If Square granted the use of a character, it would be Slime, Sora, Cloud, Chocobo, something that can function as a mascot. Geno simply doesn't have enough going for him.
Honestly, I don't understand why he has such a huge amount of support. Never going to happen. I think Banjo-Kazooie would be awesome in a smash game, probably the character I would most like to see, but I don't pretend there's even the smallest chance, because there isn't.