Villagers representing Villagers would be the perfect fit for allies
Villagers don't fight, so I'm not sure if they could be allies. I think it's best for them to run away from the fights, and when they all dies you lose. And yeah, I could put together Zombies, Skeletons and Spiders, but I put Spiders and the undead separately, because Spiders represent the underground, and the undead represent the surface at night.
So with your suggestions, here's Steve's Classic Route 3.0:
Round 1 - Zombies, Skeletons and Spiders (Green Ganons who spams jab, White Links only using their bow and the darkest Ivysaurs around, who only attack with shorthop-buffered aerials)
Round 2 - Creepers (Let's say Green Solos (Hero) which have 100% chance to have Kamikazee in their spell selection, plus one giant Hero as the final opponent of the round. And lightnings appears at random locations, which makes grow any Hero struck by it, except the last one)
Round 3 - Raid, so Ravagers, Pillagers, Vindicators and Witches (Protect two villagers (they have x2 knockback) from 5 Dark Pits who're spamming fully charged arrows), 3 Richters who spams Axe, 2 Bayonetta and 1 giant Ivysaur with Tough Guy who spam dash attack. You have a Giant DK for ally, and a Wolf)
Round 4 - Illager Mansion, so Vindicators (again), Evocators and an homage to the Illusionner, who doesn't spawn naturally (Richter spamming Axe, Zelda spamming Phantom and Toon Link)
Round 5 - The Nether, so Pigmen, Ghasts, Wither Skeletons and Blazes (Pink Ikes who only attacks when you hit them, White Kirby who only uses aerials, Dark Samus who gives you the flower when she hits you, and Yellow Robins who spams Arcfire)
Round 6 - Endermen (4 Mewtwos who goes agressive if you face them/hit them, they always teleport behind you and Dash attack next)
Bonus Game
Rathalos (There is some Mewtwos on the terrain which have the same behavior, except that if the Rathalos hit them, they'll gonna attack the Rathalos, and not Steve)