You have a point. While she always had a loyal fanbase, she's more discussed in Smash speculation than bigger franchises like Tomb Raider, Soul Calibur or Dark Souls, specially these last months. Of course rumours and fake 4chan leaks helps to boost speculation on characters that some people ignore, and that's a good thing (the only one, I think, from fake leaks).
Considering the popularity of his franchise and the amount of competition she has as a Namco character, I think she's relatively "lucky" to be that discussed in comparison to other characters in a similar position, like Morrigan.
While I agree with you; there's a dozen other characters that have always fit the mentality of being "niche" at the time, but getting talked about a ton anyways for Smash . It isn't just exclusive to Smash.
Geno? Has to deal with bigger franchises like FF and DQ; and even now he faces competition with the Bravely series, Drakenguard/Nier, Kingdom Hearts (kinda), Chrono, and Secret of Mana. Most of his popularity came from a small video back in the Brawl days. Despite this, people still don't stop talking about him.
Banjo-Kazooie? I know we like to meme about it; but Minecraft is absolutely huge and a series that both Nintendo and Microsoft seem to care about. Add Halo on top of that, and Banjo-Kazooie has tons of competition in order to be a Microsoft rep. Despite this, people didn't stop talking about Banjo after Phil supported them in Smash.
Isaac? Golden sun was never an amazingly selling game (it did sell though), and Nintendo has tons of other characters that people want. Actually, Isaac and KOS-MOS are in a very similar position Smashwise. Isaac still got talked about a ton until he was deconfirmed.
Ridley? I know Metroid is popular in the West, but in Japan it is absolutely nothing. Even Sakurai joked about Terry being as obscure as Samus back in the N64 days. That said, people talked about Ridley a ton; even when the series was at its lowest point.
K. Rool? It had been over 20 years since he had been in a game, but DK fans felt like they were getting shafted so they were really vocal about asking for more DK representation. Even though, K. Rool wasn't really an active character.
So as you can see, "popular" requests in the Smash community do not always translate to "popular" characters outside the Smash community.
That said, KOS-MOS has burst into popularity very recently (definitely above what would be expected of her at the very least). And I think there are a bunch of reasons for it:
-Xenoblade was criminally underrepresented in the base roster of Smash Ultimate, most people will agree with this. You're telling me one of the most advertised games on the Wii U, and early Switch lifespan got no new characters in Smash Ultimate?
-Xenoblade 2 was really successful, it's sold around 2 million by now; which is not that far below the likes of Persona 5.
-Sakurai has stated that he loved Xenoblade 2.
-All the content that Xenoblade 2 got was a couple spirits of the main characters (not even all the major characters), some tracks that were oddly mixed (and not even some of the most popular music in the game), and 2 Mii costumes (one which you had to pay $25 for).
-
Xenoblade X's "main" character is not in the game in anyway shape or form, as well as missing tons of music. You're telling me Elma didn't at least even get a single spirit. Correction, Elma did get a Spirit. Still underrepresented though.
-Many people dismiss Rex and Pyra's chances post-pass, because "You already pay $25 dollars for Rex, anyways".
-And now, XB1:DE gets announced as the final announcement of the September 4th direct. Clearly showcasing that Nintendo cares about the Xeno series, enough to end the direct with it.
-Monolith-Soft's 20th anniversary poster had KOS-MOS front and center, and Namco also has a good relationship with the character.
- and then, KOS-MOS gets a (most likely fake, but still could have a 1% chance to be true) leak, that does not get dis-confirmed by known insiders. The leak then starts to catch some popularity.
-So now you have Xeno fans, who got shafted hard in terms of base game supporting her inclusion rather vocally. That creates some discussion about the character, and so people look into the character and think the character is cool and start supporting them; and so KOS-MOS's fanbase starts growing rapidly. And as more and more characters get disconfirmed and KOS-MOS doesn't, her fanbase continues to grow. And as the next character's chances of being Bamco related increases, so does KOS-MOS's fanbase continues to grow even more.
-I guarantee you that if Xeno was better represented in the base game KOS-MOS's popularity wouldn't have exploded like after the cat leak.
TL;DR: KOS-MOS's popularity primarily stems from a similar reason to why K. Rool and Ridley were so popular as requests. Fans of the series think that their series is underrepresented, and so they are more vocal with their support for certain characters related to that series.