I also think when Smash fans in particular talk about adding "western characters", they mostly mean popular Indie Game characters who (except for a select few) are definitley some of those "less iconic" characters I mentioned before. I think you'd be doing a disservice to the "celebration of gaming" idea by cutting someone like Snake and adding Freddy Fazbear.
I think this is a flawed perspective - first off, because when people say western characters they're usually talking about Crash, Doom Guy, Master Chief and/or Rayman. Maybe Jonesy, and occasionally it does refer to indie characters. I think most of these guys hold their own, maybe not 1:1 with a character like Snake but they have clout in the greater conversation of "all-star" legacy one way or the other. Even indie characters like Sans and, I guess if they really wanted, Freddy Fazbear. It's hard to deny the contemporary influence, for better or worse.
But the big issue I have with this perspective is related. I don't think it's healthy to continue to view Smash in terms of "x over y". If we lose someone like Snake, is every third party character necessarily going to be on that level? No, but was that ever promised to us? Smash as a celebration of gaming is true however we cut it, but just as a museum can be a celebration of art all across the world rarely is it going to be a 100% comprehensive collection. If you've ever been to a big art museum, not every single artist's gallery will be as historically influential or critically renowned as the last. Sometimes exhibits come and go within a limited time. Smash celebrates video games in a general sense, it does not swear to be a perfect encapsulation of only the most important video games.
I believe people internalize these roles in Smash a bit too much. Guest characters are still guest characters - some will likely stick around for the foreseeable future, but it's reasonable to believe even some of the most popular and iconic faces may come and go. It's not a slight then if Snake needs to cycle out for someone who has been around for less time than him, or has had less general impact. Because for one thing, they probably aren't adding characters with this sort of either or mentality, and furthermore Smash's role to play as this gaming museum is greatly misrepresented by the community into something it's not. This is kind of the mindset that leads to roster stagnation, a fear of cycling out the old in favor of new opportunities and experiences. It has to happen eventually.
We got Bayonetta, Joker and Banjo & Kazooie before Jill Valentine, Master Chief, Lara Croft... is this inherently a disservice to gaming history? I don't think it is.