The topic of swords is a touchy one, as I feel that both sides make good arguments. The "anti-sword" side of the argument claims that there is nothing more to do with swords, yet we have plenty of characters that fight primarily with their fists, and there seems to be no problem in terms of moveset diversity. However, when you look at many of the popular picks for newcomers (Isaac, Takamaru, Shulk, every Fire Emblem character in existence), it does sort of come off as overkill. On the other hand, the "pro-sword" argument claims that there's no limit to unique sword-based movesets, and in some cases, that popularity/importance trumps uniqueness (though Sakurai seems to think otherwise). The interesting part about all of this though, is that many sword-using characters actually do have quite a bit of potential to be unique and visually distinct from other characters already playable, but Pac-Man himself would have trouble distinguishing himself without Sakurai/the developers getting really creative.
I personally see the merit in both arguments. On one hand, I don't want half of the newcomers to be sword-users because I do feel like it's a bit aesthetically boring to some extent, but I also believe that a unique moveset can be made for just about anyone (Roy wasn't a clone because he uses a sword, but because he was a rushed, last-minute addition), and I do believe that a character's significance should be able to overcome a possible lack of uniqueness, which is why I support Pac-Man. Not that I believe Pac to be expressly lacking in moveset potential, but even if he were (or is), I'd still support him anyway.
As for competition from other Namco characters, I like to look at it as not only "Who is their most important character?" but more importantly "Who is more important to Nintendo?" Sure, I'd love to play as Nightmare in Smash Bros, just as I love playing as Snake. But I'd rather have Pac-Man for being more important to Nintendo, just as I felt like Simon Belmont would've been a better choice from Konami. This, of course, is not an argument so much as a sentiment, as Snake is precedent that being the most obvious pick from a company is not that strong of a criterion.