I adore this inclusion of Petey.
Let's look at it this way,
The Subspace Army (And its Ancient Minister) are clearly in the Nintendo world to absorb it into Subspace, which is obviously the plot of the story mode. All members of the Nintendo society need to defend their world, as being obliterated would probably ruin anyone's day, and thus they all must band together to stop this threat.
However, it seems that the Ancient Minister has recruited some help from the more 'evil' denizens of the Nintendo. The Halberd is under his control, with Metaknight no doubt at the helm.
We all know that Metaknight typically has his own agenda though, which will probably have some sort of impact on the story mode.
Now think about this, who, of its own inhabitants, would make good recruits into an army that aims to destroy an world?
The evil villains that are typically always trying to destroy the world are a given, but who else...?
Mindless plant monsters!
Petey has never been known for his good looks, charms, wits, or brains, but he has been known to be able to eat people.
He's nothing but muscle (Do plants have muscles?), and I'm sure that's his role in the game. A boss met in the storymode.
Honestly, his cannon blast (You can see his silhouette in the smoke that the cannon ball fires from, I assume it comes from him?) followed by the capture of the princesses, and then his awesome roar win me over right off the bat. I sincerely hope you can play as him, as more large characters would be great, but even if you can't that's great too!
The concept of more bosses rocks.
But now the real questions arises, Who is the Ancient Minister?
Is he really just a new character created to lead the Supspace army? Is he the embodiment of the Master/crazy hands?
Is he some Nintendo character in disguise?
I can't wait to try out this story mode, it's really got me psyched!