The thing is, the issues with Sephiroth's inclusion seem to have been alleviated a little. Let's review them.
1. Dragon Quest DLC.
It's a little odd that we still hear the argument of Square having a stranglehold on anything after Dragon Quest got 8 music tracks and 4 different Heroes from different games. Even after that, though, people still go mad about this. The thing is, Dragon Quest got spirits, but Final Fantasy hasn't (besides the Smash renders of Cloud.) It's a long shot, but we theorise that perhaps this is an interesting void that Square have created in order to fill? See, people say 'there's already two Square reps so it's never going to happen.' To which we say; yeah, that would make sense for Sm4sh seems as, up to then, it was mostly the case of one character per third party. Now, look at Sega with 3, Konami with 2 (discounting Richter as he's an echo) Capcom with 2 (discounting Ken as he's an echo) and now Square with 2, as well as Microsoft and Namco with 1 each, and room to grow.
2. Balancing.
On this thread, there's already been a lot of discussion about the length of the Masamune, so we won't add to it. However, people are saying that Sephiroth would be OP- maybe, but him being good isn't a problem. If anything, he'd play with similar stats to Cloud, like speed and weight, but with slightly more graceful, combo-orientated moves, as opposed to Cloud's mainly 'big boi hit' style. Also, there are patches for a reason if he ends up being OP.
There's more, but we have to leave to do some stuff. What we're trying to say is that we are totally up for his inclusion.
Bring the One-Winged Angel to the Battlefield!