In my opinion, Sakurai mentioning Geno was just a way of him throwing Geno's megafans a bone. "I like your character and have thought about him for previous iterations." I don't think he'd be so open about his liking of Geno if he had definite plans to implement him in a game. Sakurai saying this sounds like someone entertaining a novelty, that he likes the idea of Geno but knows he won't be implemented - if he's liked Geno since Brawl, why isn't he a character already? Maybe Sakurai likes Geno in concept but doesn't see him as realizable. Maybe Square would never agree to having Geno as a character before more important assets.
Yes, Square allowed him as a costume, but a costume's not a character. A Mii costume is just another way to throw fans a bone and doesn't really generate that much money, so I can see Square being fine with giving a costume to a low priority asset like Geno, who promotes a dead franchise that they hardly have any connection to anymore. A character, on the other hand, is major advertising for a third party series. Think of how many people learned of Cloud after his inclusion. Square is now porting a half dozen FF games onto the Switch, taking advantage of Final Fantasy's cross-over exposure in Smash. Given the opportunity, Square wouldn't want to use a new character slot on an asset from a dead series with little notoriety or profit-making power. They'd prioritize another FF character, or Dragon Quest, or Tomb Raider, series that they can further promote.
Also, regarding the ballot, fan polls have shown that Geno has trouble
breaking the top 10, behind Paper Mario, Bayonetta, and Shantae to name a few. These polls also take from an incredibly homogenous sample size of Smash forums, ignoring votes from casual fans. Fans could also vote for multiple characters, diluting the results. Daisy, Chrom and Bayonetta have shown that our polls are inaccurate again and again. Nobody outside of Smash forums know who Geno is. Meanwhile, characters like Daisy and Paper Mario have overlapping support between niche forums and the general public.