I don't like assuming what a particular person or company is doing unless sources are provided. Business is a whole another realm to me. Like I said before, we don't know how long this title has been in development for, so it could have started any time after Sm4sh released for the Wii U.
Well I frankly doubt that. The game at the time was developed by Bandai Namco, and they were performing analysis for balance patches and staggered releases of new DLC character/stage releases upwards over a year after the fact. Before when Sakurai was opposed to DLC he even stated that "Creating DLC would involve large additional costs and require the involvement of a lot of people", so it's doubtful that all those resources could work split up assuming they were developing the DLC and new game concurrently.
I think you have a misconception about how Cappy works in Super Mario Odyssey. Cappy's eyes can appear AND disappear at will in that game, allowing the player to see the cap's base design in full. Usually, Cappy's eyes will appear when Mario goes idle for a certain amount of time or when Mario throws his cap.
I realize Cappy's eyes don't always appear in the game, my emphasis is that in the reveal trailer you don't see Cappy's eyes. It doesn't make sense to me that when Odyssey is their biggest and most successful Switch game featuring their star mascot character they wouldn't tease Cappy's inclusion in this new Smash game if it were completely new, but they WOULD show Link from BotW when that was a launch title for the Switch. I would expect that highlighting Cappy would be a far more important priority to them from a financial standpoint than BotW Link is what I'm saying.
Again, you are making assumptions without source material to back it up. Super Mario Odyssey being developed in tandem with this new Smash title has nothing to do with character revamps or new designs not getting in considering Link himself got a new design for the trailer. We don't know how long Nintendo has been working on this title.
And by own character, do you mean BotW Link having his own slot on the roster next to TP Link and WW Link? Because if so, I find that unlikely and unnecessary considering Link consistently has had one Adult version and one Kid version to represent him for the past 3 Smash games. I doubt Link would have 2 Adult clones, if that's what you're implying. BotW Link will be the new Adult Link this time around, and his "clone" character remains to be seen.
BotW released at launch of the Switch, but keep in mind that it was ALSO released for the Wii U and was originally developed and designed for the Wii U before Nintendo realized it needed to abandon the failing system and focus on the Switch. So by the time Sakurai was working on his new project in 2016, BotW was already pretty much done and could be confidently incorporated into this Smash for Switch game. Compare that to Odyssey which was still in development and only recently released in late October, just 4 months ago, and I think the project timeline lines up reasonably.
Again, you should probably provide evidence from Nintendo's official statements or even a news site/page if you're going to be saying this sort of stuff. I know I sound like a broken record at this point, but we really don't know how long Nintendo has been working on this title.
As for speculation on when development on this game started, online journal Source Gaming has been following and translating Masahiro Sakurai interviews in Famitsu for a long while and they confirmed back in November 2016 that he was starting on a new project, which he hasn't talked about until now. If you follow their Youtube channel or podcasts you would have heard about this, it is obscure information.
http://realotakugamer.com/masahiro-sakurai-working-on-a-new-project
Source Gaming also has a very in-depth discussion about the timeline and the port-new game question in their recent video here, definitely worth a watch:
https://www.youtube.com/watch?v=Pk0ird-i7Gg
Source material, please. Anything to back up what you're saying here about Nintendo's business practices being similar to that of shady game companies.
You're making it sound like Nintendo's desperate for a cash grab on a franchise that has done really well over the course of two decades and has consistently made it on every Nintendo console (excluding handhelds) released. I don't believe Nintendo would act this sloppy with a franchise that puts many of their beloved Nintendo characters in the spotlight, especially at this point. Sure, they can reuse assets and mechanics from the previous game (like they did with Brawl to Sm4sh), but to try to hype up a mere port when cashgrabs like Mario Kart 8, Bayonetta 2, and Hyrule Warriors already exist? It doesn't make sense to me.
I'm not saying that Nintendo is a shady company or is desperate for a cash grab, I'm saying that they don't want to make a cash grab, they're a very conservative Japanese company that is conscientious about their brand image and have always been careful not to offend their customers. During the release of DLC for Smash 4 they were careful and in fact Masahiro Sakurai initially opposed DLC and told players not to expect any saying "I understand that DLC could add a lot to the appeal of Smash Bros... However, I think there might be criticism that we are cutting up content to sell characters one by one, or that we are adding things later that should have been there from the start.", and those concerns were well justified considering how many fans did negatively react to the DLC, and I think Nintendo probably wanted to be very careful about a port of Smash 4 to Switch because so many people spent so much money on the game, the $100+ DLC and the failed Wii U system itself. So they've added as much new value as they could to the base Wii U game to make it worth people's while and not feel like they're being robbed for buying the same game all over again. I'm not saying that they're being sloppy at all but very deliberate to show the game is not a "mere port", but for all practical purposes new even though it's the same base game.
I think we have to keep in mind that unlike other ports like Mario Kart, Bayonetta and Hyrule Warriors there's a huge competitive Smash community that will always need to play the latest version of the game, so making an enhanced port that requires a new system and would likely come with its own set of DLC would necessarily be a more sensitive topic to broach. I mean just look around, it's clear that everyone would be disappointed if it were "just" a port. If it is a port they HAVE to be careful about how they play their cards.