Riiight...
@P00B
What Phantom Wings was working on was a clone engine. The way the clone engine was SUPPOSED to work (though he was never able to get far enough with it) was by tricking the game into thinking new character IDs exist. He'd need to have the new IDs attach to new attributes, and everything, as not to mess up other characters. It's a TON of work to do this. Definitely no walk in the park. He'd have to trick so many components of the game into recognizing the new character IDs, and attributes.
I believe it was Almas who released his own version of a "clone engine" however, it wasn't a true clone engine. The idea of a clone engine is to allow characters to be added to the game without replacing other characters. Though Almas's engine didn't replace other characters, per say, it made it impossible to make two versions of the same character fight. Basically, the way it worked was it allowed for each character slot to have a few .pacs for said character, putting each one into a different directory on the SD card. Say you wanted to play as Marth you'd select Marth as always, and it'd be fine. However, if you wanted to play Roy you'd have to hold some combination of buttons whilst selecting Marth and waala. The problem is both characters share the same character .pacs (Marth's), and said character .pac can only load once per match. This means that Roy vs Marth is impossible because it'd become either Roy vs Roy, or Marth vs Marth.
Chances are we will never see a true clone engine, though I'd like to be proven wrong. We'll just have to make do with what we have.