It wouldn't really work at all. We know how Yellow Devil enters, but does Yellow Devil disappear after a while if undefeated? If the answer is no, then that's where the problem lies. The player who controls Yellow Devil can simply spam left and right on the gamepad, making Yellow Devil just move left and right on the stage, constantly hitting the other players and not letting them attack at all (assuming there's no cool down time). This would actually be annoying, and I can see people actually avoiding the stage. Plus think of online...
Again, the unfair advantage is a bad thing. Matches could go on for ages and players will win without even trying/fighting. Players may not get a chance to fight back if the Yellow Devil player just spams left and right on the stick throughout the entire match. Goodness knows how Metal Face works. Or the boss player could waste match time (if the match is timed), and those that camp at the edge/underneath the stage and not do anything will win.
A terrible design choice. Mind you, Sakurai has made many terrible design choices for smash 4, including adding clones (Dr Mario, Dark Pit, Toon Link, Lucina), not changing Ganondorf's moveset, adding Duck Hunt Dog (which people didn't want), making more unique characters Assist Trophies (Takamaru, Waluigi, Ghirahim), tonnes of Mario stages and only one Metroid stage (which is a past stage, so lazy) on 3DS, etc. Adding Ridley, Mewtwo, King K. Rool, Dixie, etc would save this train wreck of a roster.
Takamaru has less following, and most of the fans are based in Japan. Ridley's fanbase is mainly in the US, but there are fans in Europe and even in Japan. People have wanted Ridley playable for a long time, the character has featured in more titles and is more iconic. Sakurai has proven that his decisions are pretty selfish when it comes to character inclusions. Sure there are some character requests in there (Mega Man, Palutena, Pac-Man, Little Mac), but was it really for the fans? Or was it just a business decision that was influenced by the higher ups? Sakurai should listen to the fans and what we want, rather than what he wants, since Smash Bros. is meant to be a fanservice.