I know that this is sacrilegious because they're so beloved nowadays, but I genuinely think BF would have been a better retro pick than the Ice Climbers back in Melee.
BF is a much better game than IC, and it feels like its left much a larger footprint in Nintendo's history.
You're not alone. Balloon Fighter has aged slightly better than Ice Climber like you have said and the game has a much stronger presence in Nintendo history as whole. If Ice Climbers weren't in Melee, the series probably would be remembered as much as Tennis for the NES, while Balloon Fighter still got to make appereances in games like WarioWare Smooth Moves and Nintendo Land in spite of Balloon Fighter not beign playable.
Plus, his gimmick of Balloons (which is showcased in the OP) would have been likely easier to implement than Icies 2 in 1 gimmick, and we probably would have Balloon Fighter in Smash 3DS.
I'm starting to wonder if Balloon Fighter will ever be added to Smash. I mean, he gets all these references made to his game, yet he himself always misses the mark on playability. Kind of sad, really.
Unfortunately, i see him in the same vein as Toad. It's one thing to be denied the entrance because Sakurai can't think of a good idea of a moveset (Heihachi comes to mind) but it's another to basically put his abilities onto other's character's moveset, which is exactly what he did with Villager's UP B just like Toad in Peach's moveset.
I know Little Mac exists, but boxing gloves are more generic and universal than say, Balloons strapped onto your back to fly, that's kind of Balloon Fighter's thing. Plus if we mentioned every double standard in Smash we would be here all day.
Soe say Villager's UP B shouldn't disqualify Balloon Fighter, but i say Villager shouldn't even have that Up B in the first place.