Ah yes.
Eldrich, my favorite character.
When I say Dragon Quest is iconic, I mean it's iconic in the regards that it's been with Nintendo since the NES, just like Castlevania. You can't compare a classic retro series like Dragon Quest to Phoenix Wright. It's apples to oranges. And yes we can use it to justify a character because it's happened at least twice with Megaman and Simon Belmont. Pit as well.
Also, "this game is all about fan service" and "Sakurai bias" are opinions more so than anything. Many people likely didn't even buy the Mii Costume, instead buying the actual characters. I can assure you casual Smash fans have no clue who he is, and while him being in Smash Ultimate would certainly bring him into the public eye, if this game is truly about fan service as you say, it would make more sense to use established, overall popular characters, which Geno just isn't.
Maybe this is just me spitballing, but maybe the Geno Mii Costume was a test to see how many people would support Geno in Smash. What if it didn't do as well as we thought it did?