I really like the idea of making kid friendly versions of traditionally adult or difficult genres and I think it should happen more. This is part of the reason I got excited for Another Crab’s Treasure before it came out since I thought it would be a kid friendly but still deep take on soulslikes even if it turned out to not really be a kid friendly game.You while much of it is driven by my curiosuty to see Nintendo's take on the genre, if there was a style of game for Waluigi to star in... I think I'd like to see him in a Rockstar style sandbox title.
Obliviously it would be nothing as remotely adult as the GTA games (the content would be something below Bully in terms of age rating) but given that Waluigi is defined as a wacky character that is either disliked or ignored even within canon, him as the troublemaking protagonist in that sort of setting feels like it works. Lego City Undercover already demonstrated that a more family friendly take on concept can work, so Nintendo applying that same sort of creativity to it that that they done so many other seemingly well-worn genres? I think it could work.
Moreover, I think it could be an interesting context to maybe do something with various forgotten Mario adjacent characters with Waluigi's game essentially being the land of misfit toys that haven't appeared anywhere else. Waluigi running afoul of Wart of SMB2 (US), having a wacky fight with Prince Pine from Yoshi's Safari (complete with a brief mini-game shout out to the latter) or eventually having to run away from an attacking Tatanga? With it being a genre that often demands a lot of NPC's to interact with, why not go down the rabbit hole and utilize some obscure favorites.
Now it would likely never happen given the company's lack of interest in the genre and "Nintendo style GTA" being a headline they wouldn't consider worth dealing with; but conceptually I think there's value there.