I agree with you that Smash's art style isn't broken, but that doesn't mean I think it wouldn't be interesting to take it in new directions. I mean, Brawl had a gritty-realistic style and the more cartoony characters like from Mario and Kirby still could fit in there, I don't see how taking things in the other direction could potentially make Snake or Cloud look unrecognizable. They wouldn't look how they do in their home games, sure, but neither did a majority of the characters in Brawl, and if I'm being honest I didn't care as it was cool to see all of these characters united into this one singular style. You can only push Ultimate and 4's "middle ground for everyone" style so far until every game onward becomes barely distinguishable from its predecessors; Heck, it's kind of hard to distinguish Smash 4 from Ultimate as-is, providing you're not looking at the UI.
When I mention Arcsys as an inspiration, I don't mean I literally want them to re-animate everything, no. I'm not envisioning super cinematic effects/animations for everyone, I just think a cel-shaded look could be great. Maybe something closer to Xrd than Strive, but I like both styles regardless. I really do think there's a way to make it work, Smash 3DS was the closest thing we have to a cel-shaded Smash and the characters still look like themselves, and that style is one of the most recognizable in the series. You see a Smash 3DS screenshot and go, "awww yeah, that's Smash 3DS", and it's the same thing for SSB64, Melee, and Brawl. I love seeing crossovers unite different characters into one palette, and it's cool to see that style change between games.
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