Wasn't expecting to find discussion on Sheik's pronouns and lolis today.
On the former, I do think it's a bit odd to continue referring to Sheik as male. When the audience was in the dark regarding their true identity back when OoT first came it made perfect sense; it was a disguise and like other characters in the game, players were for a moment, none the wiser.
Once the ruse is up though people just refer to Sheik as a she because it's just Zelda. Then in Smash's case, Sheik is pretty blatantly tied to Zelda. Its no longer about playing a role but to capitalize on the ninja motif. Post OoT Zelda being Sheik is common knowledge so referring to them by the same pronouns just makes sense.
However, I don't really see much of a problem with referring to Sheik as male given that the persona was "young Sheikah man." Uncommon and kinda specific to just the OoT depiction but not necessarily incorrect.
As for Etna, I don't think her base design (body type wise) is an issue at all. It's her costume. I'm not familiar with Disagaea but I did a quick wiki search and her usual attire is definitely falls outside a CERO A rating. Again I'm not familiar with the series, but if those are her more common/iconic looks I don't see her getting in. And that's even before the discussion of other characters from her series or whether the series would even be considered in the first place.
Back to the actual topic at hand, if Sakurai remains adamant about a younger Link, I think Toon stays over OoT/MM Young Link. If he ever really did start doing any major culling then I could see Sakurai acquiesce and cut him too if there was simply no time to squeeze him in.