I agree and disagree with this. I wouldn't throw away their current movesets, but I'd give them new movesets in addition to their current ones.
It wouldn't be worth it. Each moveset made is another character added, and I think most would agree that adding characters like Mario more than once for the sake of keeping their original movesets around is a bit of a waste, especially if the new movesets are way better or more interesting.
One thing to note though, is that even with a reimagined moveset, a lot of character's gameplans would remain the same since even the older movesets are good at portraying the character even if they aren't basically museums of the character's history like with Mega Man and Steve.
Also, there are definitely characters that shouldn't really be changed much at all such as Captain Falcon. You could give him some more utility off of what he has currently, but anything beyond that is just sacrilege.
Still though, Pokemon doesn't need anymore newcomers for this game and underrepresented franchises or franchises not yet in deserve a rep more at the moment.
It's really just a matter of what's more attractive to them. So far the 1st party characters were added to have someone from a then upcoming game (
), and presumably to keep ARMS in people's minds for the time being (
). If Pokémon has something big planned for it's anniversary next year, we could see a character from it. Possibly even if not, but I wouldn't hold my breath in such a scenario.
Imo, a Xenoblade Chronicles character is more likely than a Pokémon one, but I wouldn't say Pokémon is out of the running at the moment. It won't be from Pokémon Sword and Pokémon Shield though. Those games's times have passed.