He risks angering people who don't like Minecraft, but appeals to everyone who does enjoy it. So basically the risk he takes with every character he adds to the game it seems. No matter who he adds there will be people upset due to their dislike of that particular character/series.
You do realize that there would be plenty of people just as happy to have him in as there would be those that get upset? I've never played Minecraft, I don't personally care for Steve, but I'm not going to ignore that an entire generation of kids grew up with this game and it's a game that's still being played by a pretty big audience. to this day.
I've also seen a lot of people say that Minecraft has no legacy and other things to that effect and I don't understand how you could come to that conclusion knowing how big of an IP it is.
If you don't like the game or character that's fine, but if he somehow did get in, the people who get "pissed" about these things have nothing but their own expectations to blame.
I haven't been talking much on Steve but here's my two cents.
Yes, he's obviously an icon. Minecraft practically created the sandbox genre. Yes, there's an obvious legacy because he was the biggest Indie success, to the point of actually not becoming an Indie anymore. Is he reasonable as a character choice? Sure. Marketing reasons, popularity reasons, bonding even more with Microsoft reasons, etc.
That doesn't stop him from being a bad character in my eyes, though. First, he would be horribly generic. Sword, bow, shield would be key parts to his design, pickaxe (which is admittedly hardly different than a sword in a fighting game) if lucky. Potions and TNT are more interesting potential moves, but TNT would likely be like Snake's mines or Link's bombs, which isn't too unique. Potions have potential, but that would probably be a Side-B option if they don't have him swing an axe or pickaxe or something, and would probably be Harming, which is a little boring.
Asthetically, it's hard to make him work. The biggest thing about is design is being blocky and stiff, but he isn't like Game & Watch where his animations could still be fluid despite being different. You could do a Telltale kind of design, sure, but that's another can of worms.
On top of my percieved movepools and animation issues is the admittedly questionable reputation Minecraft has in the gaming community nowadays. It's more and more considered a negative thing since it went mainstream from what I've seen. Sarcastic joking, little kids game, YouTuber bait, etc. The only game I can think of that has equal or greater universal disdain is Fortnite.
Now, take all this and think of Smash speculation and Smash in general. People don't care as much about relevance and more about liking the character, their games, and what cool crazy things they can do. This is why I don't think he fits here. When people bring up Steve, he's below meme picks like Sans or Shrek; the response is basically universal seething disgust. People enjoyed the game, but there's no attachment to Steve outside of that because he's a blank, unseeable Avatar. The game has a tainted reputation, and there's not much about him that makes him super crazy (think top picks. Skull Kid is a demonic wizard basically, Isaac is an Earthbender, Geno is a puppet with a gun hand, Shantae is half-genie and can use magic and transform, Ridley is a massive evil dragon thing, K. Rool is an alligator with a cannon, Banjo is a tag team duo with various powers, Steve place blocks?, use a pickaxe bow and sword, maybe potions, maybe TNT. None of that stands out like rest). People have a perceived notion that his existence also would endanger Banjo & Kazooie's ability to be playable, and they're infinitely more popular than him, and that adds onto why people would hate his addition. If he got in, he would undoubtedly be the most despised newcomer in Smash history. You thought Isabelle's reaction was bad? This would be orders of magnitude worse.
In short, I just don't think Steve would be a good fit in Smash.