I still don't really think Steve has a chance. His character model is too boring and his animations too basic and choppy. That isn't to say I think Minecraft as a whole will be left out.
Personally, if there is a Microsoft collaboration in the pipeline I think it would be Banjo/Kazooie as a fighter and Minecraft as a stage. Now it would be odd to get a fighter without a home stage, but they wouldn't be representing their selves as much as representing Microsoft as a whole.
Firstly, B&K have been in the running for ages with Sakurai even considering them way back when. Further, Microsoft has been paying a lot more attention to the Bear and Bird lately, showcasing their games in their stores and such after years of silence.
As for a Minecraft stage. I think it would represent the game much better than a fighter since Minecraft really is about the world. Thin about a stage with several preset layouts all with destructible environments and occasional mob attacks. There could be a few overworld layouts, a Nether layout, and Ender Layout, and then one made to look like Spiral Mountain to give B&K a pseudo home stage.