I see. Those rumors might be possible. Still, I must ask; Geno is a third party character, right? So how does it help that there were also 1st party characters, as you said in your first line?
Yes, he's completely 3rd party. That's why seeing his costume in base never felt likely at all, assuming he wasn't going to be playable. It's kind of odd that 3rd party costumes are all DLC again, but that's probably just to "more companies get more money".
I've spoken of this theory before, but they probably didn't re-license most costumes for Ultimate right away because DLC wasn't a thing. It's a hindsight-related theory, mind you. DLC, as I noted, wasn't greenlit from the start. It's possible the later costumes(bar maybe the last set, which includes Geno) from the final set were the only ones licensed for Ultimate base game, but moved to DLC.
Though worth noting that outside of changing negotiations, they are going to use any costumes they licensed. If Geno is a licensed costume, and kept that way, he'll come back as one, even if they agree Premium is better in the long run. This wouldn't change anything about Geno being a playable character either, as that's a different thing. It goes without saying if we see Geno's costume next character, he's probably not playable. If we see him playable, his costume is not necessarily scrapped either.
It's also possible Nintendo thought on just bringing the costume back and never licensed it for Ultimate period. So they can't reuse it without licensing regardless. Would you believe many don't realize this is how licensing works and "returning the costume" entirely depends upon what SE allows? It's been hard explaining the basics of licensing.
Related, this is why porting over Ultimate is very difficult. Anything they want back has to be licensed all over again. Characters, Spirits, Music, Costumes, etc. Sakurai noted getting the licensing for this game was highly difficult, and likely won't happen again, Sooooooo. I wouldn't expect a port whatsoever. Just a new game, with cut content. I can only hope we get everyone back again.
Though one last thing to note; if Geno is Premium, I doubt he'll be playable too. If Geno's costume returns as regular, it's possible we see it after Geno being playable. We have yet to see a single scrapped 3rd party costume, and there's a good chance all are returning as is, regardless of one of them being playable. Thought that's only because we keep seeing them all come back at this point. It's not much of a theory based upon evidence, just purely observation. Likewise, when licensing a playable character, they may just scrap the Mii costume of them instead and not re-license it. Both are viable options. Returning every costume does make the other companies more money, so in a way, they'd say yes easily to the licensing. But that's a likely outcome, not necessarily the actual outcome.