Adding Toad and Waluigi as DLC isn't a great business choice. Yeah, they are recognizable, but
are more well-known than them and they are already in. If you are a fan of two of them, chances are that you already bought Smash.
At this point, adding Mario characters because of popularity will get you diminishing returns.
Then again, we got Banjo, so who knows.
With all due respect, couldn't the same thing have been said for
back when they were added in Smash 4 as DLC? What you just described for Toad and Waluigi could just as easily apply to Corrin, as not only did they not really expand Smash's potential audience, but characters such as Marth, Ike, and the Awakening cast were arguably more iconic than them.
I'm not even saying this out of spite for the character, as I actually quite enjoy having Corrin around, but we already had a DLC character in the past that went against these qualities.
Even going beyond that, I don't even know what your Banjo statement has to do with what you explained. Banjo is from a new franchise and thus brings in a new, if somewhat small, audience to Smash.
They're not the same thing.
I guess to go back on Waluigi and Toad being a bad business choice, I just have a different stance on it.
Nintendo isn't just focused on characters that lure new people into trying out Smash (Joker, Hero). They also put in a character that would convince quite a number of Nintendo fans to purchase a Fighters Pass (Banjo).
You are right in saying Waluigi and Toad would not bring in new people, but that's not the only incentive Nintendo is looking for in DLC. Waluigi and Toad could cause quite a few Nintendo fans to jump on the Fighter's Pass and at the end of the day, Nintendo's goal is to sell as many of these passes to the Ultimate install base as possible through a variety of choices.
Do I think it's going to happen? No, I don't, but I do think adding what is essentially one of the most demanded characters in this speculation cycle as DLC would be a pretty good move on Nintendo's part.
It also helps that he's pretty mainstream, so he'd satisfy a lot of casual fans.
Just my two cents.