I know Nintendo and Capcom are different, but Capcom managed to appeal to western audience by incorporating western characters like MVC and Marcus Fenix in Lost Planet for examples. It's not like Nintendo is allergic to western contents. And, I definitely think people are exaggerating Nintendo's bias with this line of thinking.
If low hanging fruits were only things Nintendo going for, we wouldn't have more western contents in Ultimate DLC cycle.
I can't speak on Lost Planet as I have no experience with the series, but MvC honestly feels like a pretty bad comparison when it's only a 2 company crossover made specifically because some guys at Capcom were Marvel fans and had already worked with them on previous licensed titles.
It's really not a Nintendo specific bias here, Capcom and just about any other Japanese dev is going to be primarily catering to their home audience. With the same being true for any other dev in any other region. In some cases deliberately but a lot of the time just because that comes naturally.
Capcom is definitely an example of a company that plays with Western ideas and inspiration more than others but it's still very much through a Japanese lens. If you went back and handed off RE or DR to a western studio for example, the end result would be very different from the games we got.
And even then, you look at MVC again and it's still more niche than other titles. It's a blend that caters to a very specific audience despite the seemingly wide appeal on paper.
Moreover, I don't think it's as much an eastern vs western appeal sort of thing for them outside of a few specific cases like Okami or Kunitsugami.
A good game is a good game.
That was a bit long winded on my part and seemingly negative towards western parties' chances but I actually feel the opposite.
Capcom and Nintendo aren't much different in region bias, but I don't think that's really going to stop more western content in Smash.
I think it's pretty clear they make some effort to acknowledge the West's tastes too. It's less a matter of if imo and more a matter of who.
I do feel like it'll be big, but not the biggest, name's that have the better chance here (with some potential exceptions.) There's not as much overlap in audience or brand image with stuff like MK, GTA or COD but I do see the likes of Undertale, The Elder Scrolls, Doom, etc. being on their radar (the Mii costumes come to mind here.)
Stuff that's bigger in the West is certainly possible but at least some level of interest or familiarity on the Japan's part is likely still a big point in an IP's favor.