The idea of downloadable content is iffy for several reasons:
1) Nintendo would charge for it. Seriously, Nintendo is a company that loves to make money, and if they'll charge 20$ for a nes game on a GBA cartridge, or 5$ for an nes rom on the virtual consol, then they'll also charge for a smash bros patch. It's just good business.
2)The wii doesn't have enough memory to hold downloaded content on that scale. Some kind of memory increasing device or storage thing would have to be released first, and that's looking to be a development set far in the unforseeable future.
3)It just isn't Nintendo's style. Nintendo, as a general rule, releases only finished games, and only releases them ONCE. Other companies may reuse an engine to crank out quick sequels (crash bandicoot, spyro) or updated versions (kingdom hearts) but Nintendo rarely does this. I'm not even sure Nintendo knows how. The last time Nintendo reused a game engine we all got Majora's Mask.
Why was there no update to Smash Bros Melee? Nintendo could have made money hand over fist just by releasing a smash bros with maybe three more characters and levels tacked on. It wouldn't have been hard. But Nintendo didn't, because Nintendo is a company that never revisits a released game. So I seriously doubt that work on a game, even one as major as Brawl, would continue post-release.
Here allow me to share my point of view about this whole downloadable content deal:
1.5 bucks for 3-5 characters, a ton of new courses, features, and options, and there were no last minute additions (*cough* Pichu). Plus it gets some stress off the developers' backs, and the gme can come out eariler, with some neat expansions down the road. I look at downloadable content for other games, and one expansion pack or major downloadable content costs $5-$7, and most games that have this only have up to around 3 expansion packs and such.
2.The Wii has tons of memory, plus you can always buy more memory for it. They already have a storage increasing device out for the Wii, so this one is solved.
3.The game would be finished, of course,. plus the game could be worked on and added to, much like constantly updated MMORPG's, but to a much lesser extreme of course. Considering the last time Nintendo reused a game engine, if they do that with SSBB we'll get an even better game, hopefully one that IMO is equal to my 4th fav LOZ titles (Majora's Mask & the Wind Waker=tied).
The reason there was no update is Sakurai wanted to continue working on the Kirby series, and then went independent, Nintendo was desperate to get support so they could get out of last place with the GC, and needing backup for SSBM, Super Mario Sunshine, Metroid Prime and tLOZ: WW with newer games, like MP2: Echoes, Mario Sports, Mario party, etc.
Nintendo realized the few games the GC had online access for didn't work, and the system was nowhere near as powerful as the Xbox or PS2, and with Sakurai gone independant, Nintendo turned to their next console, the Wii (then called Revolution). Nintendo, in short realized the GCN online system was annoying, was hard to operate, and relaly wasn't that good. That is why SSBM never got downloadable content, lol.
Nintendo worked on that, and focused on tLOZ: Twilight Princess, and soon convinced Sakurai to work on SSBB, and Sakurai, his team, Hal Laboratories, Game Freak, and other Nintendo employees began working on the most important Wii title. Considering Nintendo is probably going to release SSBB in 2007, I say good for them, with the downloadable content.
Also what Nintendo has done in the past with a minimal online operating console (aka the Gamecube), and what they are doing with a full operation online-focused game system (the Wii) are two totally diffrent things. Wheater Nintendo likes it or not, they need to come into the future, and that future is downloadable content. All the other big titles, and even somewat big titles are doing it now, why not the Wii with SSBB=?
O, and for the whole re-release deal, Yoshi's Story, Yoshi's Island DS, the GBA port of Donkey Kong Country 1-3, Didy Kong Racing DS, Super Mario 64, New Super Mario Bros, and Super Mario Andvanced 1-4 come to mind. Nintendo is actually heavily know for re-releasinng the same game, or a really close remake, and Nintendo gets burned with that a lot.