I am wondering if the lack of KO ability is really all that important or not in brawl. Its certainly a perk if you can set-up into low percent KOs, but how about the ability to lack KO moves and still be able to body a character so well they never get the chance to really retaliate? Smash is a game where at like 400% grabs become KO moves. So eventually lacking a KO move is not really important or even necessary to go for because other options open up.
The point I am getting is could Sheik be one of those characters, but not in the most ideal way? Yes, she lacks any sort of KO power for a long time, but I wonder if its really necessary. Needles will tack on 18% and that's a pretty good number. It is more realistic though that it will not be the full damage though. Anyway, needles are great for punishing aerial landings. Maybe the best move capable of reliably timing and hitting landings due to lasting a long time and covering so much area.
Sheik has a variety of good launchers such as ftilt or her dthrow that put the opponent above her. With her ground speed and acceleration upwards she can reliably punish a variety of options the opponent tries to do in the air in that area. If they attack/air dodge first sheik can be there to catch it. If they get too far away or sheik cannot find a safe opening to attack she can needle the characters landing at the very least to tack on damage. Eventually, all these little exchanges should open up for high percent where she can start getting KOs.
I'm not saying this is top/high tier potential, but enough to probably pull her into upper mid tier perhaps. Either way it would require some results to back up the idea I guess. Having an IC/Pikachu weakness is not completely debilitating to one's tier list potential if you look at DDD. He has a slew of top tier match-up weaknesses and yet manages to place high. While having all manageable match-ups with the rest of the top/high tier (only -1) going even with most of mid tier. So, I do not see much in match-ups putting her behind if you go by that alone. Its probably something like the ease of which she gets these victories and results that are actually putting her behind.
Edit: Actually, going off of match-ups alone DK should fair worse in a tourney environment than Sheik does having worse -2-3 match-ups than Sheik does. And the stagelist is such now that I do not think its bothering her much to make any lasting impressions. Its probably just lack of results for the tier list.