I feel the argument about Captain Toad not being able to jump can be worked around. Here's an idea I have for him.
The biggest reason why he is unable to jump is because his backpack is too heavy. How about we empty it out from the start, and he is able to add things into it. Imagine Captain Toad being a mixture of Villager and Peach. His neutral special (B) is Villagers pocket, but can up to six item and projectiles at a time which is stored in his backpack. The more stuff he holds, the more damage his attacks deal, but his jumping also gets worse. Side special (Side B) is that he throws or launches a random item or projectile that's in his backpack making him weaker, but also lighter making recovering much better. His up special (Up B) is emptying out his entire bag. Every item is tossed out and launched in order for him to recover. The less stuff in his bag, the better his recovery is. Finally, his down special (Down B) would be Peach's vegetable. Like Peach, he is able to pluck vegetables from the ground (sometimes bombs) and use them as items, or, in Captain Toad's case, store them in his backpack. This is the only creative way I can see Captain Toad working out for Smash.