I think the thing to remember is Banjo was still pretty big in Japan at the time, bigger than what even Halo got. Also although created by western development, he was initially owned by a Japanese company (The same Japanese company that is the main focus of this crossover)
To me, Banjo is a Nintendo character. Getting him in Smash is a dream come true. There's a reason he's the only third party character I want.
I think
BluePikmin11
had pretty good suggestions for other possibilities for western third party characters
-Doomguy
Definitely a possibility, it's just difficult to find out how popular it is in Japan. From what o can gather, it seems just popular enough to warrant if you look at its legacy (similar to Castlevania I think?)
-UNDERTALE character
Definitely a franchise I think Sakurai would look at, it's kinda insane how many undertale characters will pop up in popularity lists. But I've also heard the creator of the franchise doesn't want them in fighting games
-Crash Bandicoot
This is interesting one. Because from my understanding, their version of Crash isn't the same as our version. Even redesigning Crash to better appeal to the market. And I heard N-sane trilogy didn't keep these changes, resulting in the game not performing well (or so I heard)
Minecraft is definitely still a possibility (and with Banjo in, I'd have no qualms with, similar to Ridley vs any other Metroid character). I see no reason why both can't happen honestly. And if you're using Verg as the reason, it seems unlikely his source would hear of something like a Mii Costume before the game is even shown. Minecraft is one of his oldest predictions.
But aside from those four, can't really think of anything else. I think prominence in Japan is still incredibly important. Banjo being a Nintendo IP had that.
I guess Tomb Raider Lara Croft? Never the biggest seller, but she's owned by Square now and still seem to do nice enough numbers.