I guess I never understood the whole thing with Geno myself. Compared to the rest of the cast of Super Mario RPG, I always found Geno to be the least interesting character in the game and was really just there to mostly explain things that the other characters couldn't know.
He is a game breaker, without any extra items required to do so. So that might influence people. Also, he's the only one to get a cameo in a later game, so it sounds like he might be the most important or most recognized by Nintendo/Intelligent Systems. And possibly players alike.
I found Mallow more interesting myself, but I can understand why people like Geno. As a person who favors gameplay, he was pretty neat. Also, playing as a living puppet was not super common among most games either.
There are other contributing factors than that. Lately SEGA has been highly supportive of Nintendo, making a lot of Nintendo exclusive games. And I would not say they're doing just fine, they could be doing better. There are reports saying that they have been firing a lot of workers lately, that's not "just fine"
I don't buy they're super important to Nintendo. Notable, but that's it.
And even so? That is irrelevant to getting a third party character into Smash. If Sakurai thought that was important, he would've specified so in his third party criteria. But he quite blatantly did not. They just had to be unique(easily seen as notable), have a Nintendo appearance, be "special"(this is the only addition as of Smash 4, but this does not designate "important to Nintendo" in any way), not originate from a Manga/Anime. Anything else is just made up stuff people like to use to destroys the hopes and dreams off or out there choices. Also, keep in mind many predict Pac-Man, who is quite blatantly not very important to Nintendo at all. They had one game co-developed with them. And that's it.