are we really glossing over banjo in this debate or am i missing something
Call me Microsoft, because I forgot about Banjo
That is a good point, if Microsoft was really willing to bring Banjo to Smash despite having absolutely zero plans for the franchise ever since Nuts and Bolts put the series back in the ground a decade ago, there's nothing to say Namco couldn't do the same with KOS-MOS. Obviously, being from a series that is getting frequent, contemporary entries is a benefit, but it's nowhere near the death sentence that people believe it is.
I'm not sure if you're aware of this, but a franchise having a rough period is very different from being outright dead. Especially considering how game development can take about 2-3 years of development these days
Like I said, dead might be a strong word, but I still stand by the point I originally made: If Mega Man and Castlevania were able to get into Smash when their franchises were struggling and their futures were iffy, there's nothing saying Xenosaga couldn't do the same.
Through frequent projects that would barely got off the ground before being cancelled (Mega Man Universe, Mega Man Legends 3, Maverick Hunter, etc.) and the whole "our top men are looking into this" thing, it was pretty clear that Capcom had no idea what to do with Mega Man between the release of 10 and 11.
Likewise, the radio silence regarding Castlevania after Lords of Shadow 2 underperformed both critically and commercially at the beginning of 2014 likely means Konami has the series on ice until they can get their bearings. They have no issue rereleasing the classic games, so there's likely some interest in the franchise still there, but it's far from in a healthy state. Perhaps there is some big, return-to-form Castlevania that's far along in development and will probably reach an actual release, but there's really nothing to suggest that.
Obviously, the difference is Capcom and Konami were interested in bringing those series back in some form, which doesn't seem to be the case with Namco and Xenosaga. However, that doesn't mean that KOS-MOS is automatically deconfirmed like much of the thread thought upon initially reading the news. Smash isn't a glorified billboard made to advertise whatever a company wants, characters without any modern releases can still join the battle.