It was a big enough deal to make a collaborative effort to get not only costumes in Smash For, but also a boss that doubles as an Assist and music tracks in Ultimate, and then costumes again and Spirits post-release, but not "enough" to get a fighter when even as far as the costumes first came to Smash, the franchise had surpassed Mega Man and was rapidly encroaching Street Fighter's numbers?
Giving the series content guest series would be LUCKY to get but no fighter when one could easily be negotiated for on top of all that....because "priorizing other franchises"?
...Yeah? Space is tight when you have only ten-ish slots planned for your passes and like half the game industry you could reasonably negotiate with (Piranha Plant was a bonus and Sora wasn't originally planned, so I don't think they were factored into the original plan). Hell, Resident Evil was Capcom's top seller, and has still sold 6- million more copies than Monster Hunter, and it only got four Spirits. Actually we could make a solid argument for RE in regards to the original topic starter, but let's not get sidetracked.
The point I'm making is that even of a series or character has a lot of boons in their favor, there's a lot of other characters out there that also have incentives to be added. A strong argument for someone's chances is not the same as
guaranteeing a place in the roster. Yes, we could hypothetically find twelve other fighters to add instead of a Hunter; But we could say the same for
anyone, because it's a big industry and there's a lot of iconic series and characters to choose from. I'm arguing that a Hunter has a good argument to be added, not that it
will.
As for the Spirits, the ones added post-launch were for Monster Hunter Rise and Monster Hunter Stories 2, both of which were upcoming times Switch exclusives. It made sense to throw some Spirit fights together for a quick cross-advertisement. I'd change my tune if the game shipped with a bunch of Monster Hunter Spirits floating around, but we only got Rathalos on launch, followed by two quick promotions for upcoming games. Rathalos is undeniably a standout piece of representation, but it's the only standout. Beyond that we've got two songs, a single Mii, and a couple of promo spirits; That's a little above average for a third-party without a fighter, but not earth-shaking.
A series that's notorious for only including monsters and armor skins for existing characters with crossovers with the sole exception to this day being Marvel Infinite (and there's even rumors this was behind the MH team's back, which requires verification but the fact the rumors exist at all exemplifies the issues in getting an actual "Hunter" character in anything)?
I'd chalk that up to simple pragmatism. Monster Hunter is usually pretty light on plot, and the handfuls of defined characters are usually replaced each game; Out of those handfuls, only a few of them actually do any hunting, and they'll always be second fiddle to the player's avatar. Plus, those avatars are usually covered head-to-toe in gear, with little distinctive traits of their own. So, the most recognizeable aspects of the series are the armors and monsters. A quick armor set or weapon would be the easiest bit of crossover media - And what do you think is more enticing to a player, decking themselves out in Rathalos armor or staring at an NPC who's much cooler than you could ever hope to be (And probably an OC, no less, given the whole blank slate avatar thing)?
Of course, this'll probably sound like a knock against a Hunter's chance to be in Smash. But I think it's worth noting that certain crossovers will prioritize different aspects of a series. For instance, Sonic Frontiers is a single-player, semi-open world game with a relatively limited selection of NPCs, and it probably won't have a reason to throw in a Hunter as a playable character or an NPC; Giving Sonic a Rathalos Armor skin and a slab of meat is good enough. But crossover fighters like Smash or Marvel vs Capcom are
built on representing games that people enjoy (And comics in MvC's case, but that's beside the point). Oftentimes, characters are made out of blank-slate avatars to serve as a vessel for the gameplay mechanics, even when the series usually uses marketable mascots instead (re: Hero over Slime).
As for the rumors, I can't find anything concrete over the MvC:I Hunter being against the dev's wishes. There's a six-year gap between MvC3 and MvC:I, and it's been seven years since then and Monster Hunter has gotten much bigger. I'm not going to worry about old rumors until something concrete comes out.
Yeah, not buying it.
It's painfully obvious that a fighter simply was never in the cards because there was no agreement for it between all parties involved. Something Sakurai is on record as having to happen for a guest to be included as a fighter.
Eh, I wouldn't be that quick to
definitively say it's because the devs are against it. At the moment, the only reliable source on that is eleven years old and has been later contradicted. With as wide a selection pool as the one Smash has, sometimes a character isn't added simply because they aren't added.
WRT Monster Hunter: Would the Felyne be a viable choice for a fighter?
Eh... Maybe for another series, but Smash places a big emphasis on player characters and translating the gameplay of a game. Felynes are funny marketable mascots, but they're primarily support characters. They're only playable appearance was in Generations, where they're still low-damage support characters. If we're talking about the first, possibly only MH fighter in Smash, I highly doubt we'll see a Palico.