Yes, this outfit is canon. But it was a mistake back then and it's still a mistake now.
Samus is a fictional character who has no agency. Her appearance, persona, and actions are entirely determined by game designers. Most of those designers happen to be male, and they were likely taking advantage of the sex appeal inherent in skimpy costumes to engage a specific audience. Sure, Sakurai claims the person who made this particular costume was female, but Sakurai was still her boss and ultimately told her to design it. The original outfits from earlier Metroid games were drawn by (probably male) designers too.
They created a unique, strong bounty hunter character who also happened to be female in the original Metroid games. They used her gender to turn the genre on its head, as most gamers at the time were young males accustomed to playing as generic male soldiers. The twist ending of the game was there to show that it doesn't matter who is behind the suit, it doesn't change their value or abilities. Samus was depicted in a bikini because they were working with very few pixels on the NES and that was the only surefire way to say "this character is female."
Since Samus's gender was established, modern Metroid games have made the mistake of using improved graphics and sex appeal as a "reward" for beating a game, which entirely misses the point of the original's twist ending. Instead of using her gender to show that among space bounty hunters, gender probably doesn't matter that much, they focus on it as the primary aspect of her identity.
I have no problem with real women wearing clothes like that, but Samus was created and dressed by male designers. Real people can choose to wear a bikini to go jogging, or to just show off their bodies if they want to. Whatever personality traits we project onto Samus, she did not decide to leave the house one morning with the express purpose of showing off her midriff to metroids. At least the zero suit might protect her bare skin from hostile alien environments.
If you still don't think that Samus's character design is demeaning and sexist, think about how other characters in body armor are treated in video games. In the Halo universe, the mystery was always about what Master Chief's face looked like. The designers teased gamers by showing him remove his helmet for a split second at the end of Halo 4 if you beat the game on legendary, a reward reminiscent of Metroid. But instead of removing all of his armor at once and seductively moving the camera up his entire body, stopping to admire his chest and butt, it went straight to his face. In Metroid Prime 2, players were rewarded with Samus in the zero suit as the camera slowly moved up her body, only coming to her face at the very end for a few seconds.
There is a huge disconnect between how females and males in similar roles are depicted in video games across all genres, and if we can't even recognize sexism in its more egregious form, how are we ever going to expand our community to include more women?