I've addressed the argument about the characters being based on actual people multiple times.
Yes, a lot of the characters in both series are indeed those that existed in real life. However, Dynasty Warriors and Samurai Warriors are video game franchises. Sure, they may be based off of actual historical events (and in Dynasty Warriors case, the ROTK novel), but they didn't start off as a manga series like Dragon Ball did or start off as a comic book series like Batman. The Warriors franchise have relatively stayed as a video game franchise, and the characters that are based on real people are Koei's version of them, which to me makes them distinct enough to be considered more of a video game character than someone like Batman from the Arkham games.
The argument against them would pretty much fall in line with the "Sora might not be considered a video game character" argument that was happening last night, except this might actually fit more with the Warriors franchises than Kingdom Hearts. If Nintendo doesn't view Dynasty Warriors, a video game series that is only based off of a very old novel set in the Three Kingdoms period of China and nothing more, a video game franchise, then it'll probably be blacklisted in Smash. However, we'll never know if this is actually the case since Nintendo won't be bothered to answer a question like that anyways, so as far as I'm concerned, a Warriors character in Smash is a possibility.