What is a better alternative to the % rule? Knockback dealt/received is highly subjective: I could gimp someone 2 times while I die high % "regularly" and now I lose even if I'm clearly ahead on the last stock. There's no way to objectively gauge whether the person who has dealt more knockback is winning or not if you're just going off knockback.
Damage dealt is in the same boat as knockback. Doing more damage than the other guy =/= you are in the lead.
Handicap chart based on weight/resistance/etc? Why? So we can argue whether MK with a 50% lead over Snake is "truly" in the lead or not, despite how massively subjective that gets? What if MK is at 0 and Snake is at 49%? MK isn't at kill %, Snake could get gimped. But no, because his weight was over x margin area, he gets the win. Or MK at 150%, Snake at 199%. Both characters are in the kill zone, but due to some subjective view that Snake kills easier than MK, or that he deserves a % margin for timeouts against MK, he gets the win. Stuff like that isn't gonna fly lol.
As stupid as you think the % timeout rule is, every time we've had this discussion you've not been able to come up with a solid, viable alternative.
THE BEST alternative I have heard to the % rule is to completely scrap end of the game rules like that, and force people to play a same stock/1 stock shorter timer rematch same stage to decide the winner. But that basically shifts the burden or focus from declaring a winner after time runs out, to effectively extending the timer for as long as needed (rematch over and over if needed) until someone wins. While also completely resetting obvious "winning" scenarios like Snake at low % MK high % last stock and now WHOOPS MK let's go back to 0% and start over.
That is the best alternative to the % timeout rule. Anything else has been proven to be more subjective/less solid/creates more trouble than the % rule does in the first place. I would stop hating on it and saying THAT is the reason MK is broken lol. The only thing you can do at this point is either abolish the intent to declare a winner immediately when time runs out if possible, or purposefully penalize players for going to time. Nothing else will stop MK from getting the win by timeout except rules that are even worse than the current one, and I'd rather not add in bad rules when you could nerf the character in other ways without anything garbage like knockback dealt being the deciding factor on who wins, or anything similar to what you've suggested lol.