Going to be perfectly honest I think people are sleeping on a Xenoblade 1 character for a multitude of reasons:
-Xenoblade 1 is back in the line of relevancy while 2 has seemed to have rotated out of it, Nintendo seems to be focusing their efforts on promoting it rather than 2 so it'd seem weird for them to suddenly choose a character from a game they haven't really been investing in as of recently
-The characters from 1 such as Fiora and Melia have completely unique kits and many traits that are distinctly to them, the former being a twin-blade wielder that can use drones and the other being a staff-wielder who can use ether and elemental attacks, while Rex is cool he mostly fills a standard sword user archetype even with Pyra/Mythra who mostly add elemental properties to his moves, and considering all the other DLC characters have been much more than that (Like Hero having a command deck/Mana Points and Byleth having the Hero's Relics) I'm not sure if it's something they'd go for
-Going back to the subject of Fiora, she already has assets in the game already via Shulk's Final Smash, considering we're getting a character from ARMS, and Chrom is in Robin's Final Smash, reusing assets doesn't seem too farfetched but said model would need to be polished up
-There are a couple Spirits from Xenoblade that were featured as trophies in Smash 4 are not in Ultimate, these could be included with the Challenger Pack and additionally the rearranged tracks in Definitive Edition could be included as tracks in the Challenger Pack
Overall I think timing is in a Xenoblade 1 character's favor more than someone from 2, but who really knows, it just depends on if Nintendo is willing to revisit marketing 2 despite them currently focusing on marketing 1.