If I'm finna chime in, I don't think N64 Nostalgia is quite in full swing. NES and SNES era nostalgia is still much stronger honestly. Looking at the past 10 years, we've got MM9, MM10, Blaster Master Zero, Gunvolt, Sonic Mania, Shovel Knight, the Messenger, the Ducktales remake and so on that shows people appreciate that aesthetic and gameplay style. Axiom Verge, The Binding of Isaac, Bloodstained ect ect. While N64 only really had Yooka Laylee and A Hat in Time to re-create stuff of that era.
Now, if we're going to assume Nostalgia IS a big deal, and that Minecraft ISN'T the MS character that we think will happen which we don't have a ton of proof on. There's no guarantee it's Banjo.
What Banjo-Kazooie do have in their favor is popularity with the Nintendo fanbase, at least if online is some indication of that. But Minecraft's one of biggest games of all times in terms of sales, granted, Avatar is that for movies, but more people know Godzilla or Indiana Jones for example.
Back to Nostalgia, if there's N64 Nostalgia, there's also Fulgore, who, unlike Banjo also had a recent game. But does that make Fulgore more likely? Probably not. But he's my personal pick.
If Nostalgia's playing a factor, there's also Battletoads to consider. An old ass NES game, with multiple entries, kind of put Rare on the map. Rash has shown up in multiple newer games from KI3, and Shovel Knight. The dude has a moveset that almost writes itself. And a new game coming out soon.
Not that any of that matters too much, but I think people are forgetting there's more to MS's IPs than Banjo and Minecraft.
Ryu Hayabusa from the NES games or from this sinister design:
View attachment 225524
This design above give me
MORTAL KOMBAT vibes.
It's not that MK-ish, MK ninjas dress a little bulkier, but I get what you're saying, it's grittier. Either would be fine with me. Though I feel Sakurai would pick the OG design if he only gets one costume. In many DOA games Hayabusa gets a rendition of his NES suit anyway, so we've seen it in 3D before.
I think ideally, he'd have the two costumes much like Cloud and Bayonetta do.