Ivysaur is not severely iconic. Seriously, stop overrating him so much. He only got in because he was the middle evolution and Squirtle was more popular than Bulbsaur, with Charizard severely outweighing them both. They could've just as easily went with Bulbasaur, who is way more iconic than his next evolution. Venusaur is also still more iconic.
Pokemon having 9 would definitely outweight Mario's direct 7 representation(enough with the bullcrap, Yoshi and Wario are not counted as Mario characters. They're their own series entirely in Smash. Let it go and just live with it already). Right now, Pokemon has one less than Mario after Mewtwo comes back. Getting more than Mario's 7 is already going overboard, the main series. That, and Ivysaur nor Squirtle can easily come back without the other. They were mainly notable in Brawl because they were together. Charizard was regardless of them and easily earned his own unique slot(slots are a thing, keep in mind. Slots can hold multiple playable characters too. As PT's 3 characters clearly sknow).
SF is perfect at 3 or 4. Both work fine. It has 4 viable characters right now(with Krystal being the only one to bring anything more unique than Wolf, who is already highly unique). DK can easily justify 1 or 2 more as well. Mother is more than easy enough to get 2 total at the very least. Pokemon really doesn't need to go beyond 7 or 8 unless it has some better variety. As of Smash 4 and even during Brawl, no type was reused for playable characters, the best variety the series is about. We don't need another Water Pokemon. Ivysaur brings more with a more unique moveset(a lot of Squirtle's moves are decently covered among the cast, and Grenija as well does cover a very similar role. It's not just type, but the fact he's both a starter and has speedy water moves, and also was better designed to a degree. The only major difference between them other than a somewhat different moveset is their size and how it facts into their power/defense capabilities. Greninja can lost longer. That's about it). I would gladly take Ivysaur back, but I'd rather just throw another Grass type that we have yet to see at all, namely from the other vastly underrepped Gens. He has never actually given a playable character for anything but the latest Gen at the time. To be perfectly honest, if we actually had 3 more playable characters, I'd rather they were from Gen II, III, and V. Preferably of unique types, but Pichu would be fun to play as again anyway, especially if they found a way to make him feel more interesting(like his electric attacks could increase as he gains more damage, but he also only takes damage during electric moves of his own. I could also see him resisting other electric attacks to make him more viable). The whole damage mechanic was better done to a degree with Lucario(obviously the mechanic is different, but they focus on the general gimmick of "damage" in some way). It's a crutch for him, but I also think it makes him very interesting too.
Also, with Tether Recoveries removed for balance purposes, it's a problem for Ivysaur because he outright depends on it design-wise. He has very few options for actual Up B's as is. That's not even counting the customs. Another thing to note is returning a character is one thing, but making them properly with the new changes to the series as a whole takes a lot of works. And balnce. And customs. Pokemon does not work as well as it used to for characters due to the customs alone. It requires a bit more than just simple options and actually makes choosing them a bit harder now. Since a lot of them have far less similar choices to replace a custom with(there's not much for Vine Whip even, or Bullet Seed...), they can't just slap it on because of "tons of moves available". Having lots of choices only works if they make sense. I feel that a lot of Pokemon have far less chance of happening due to this alone. I honestly am not so sure Ivysaur and Squirtle have a good chance of coming back. Pichu does, if only due to being a clone and faster to remake, as well as having more options for a new gimmick than the other two. I also honestly don't think we'll get anyone new till Smash 5 proper Pokemon-wise unless the next Gen holds a really interesting character and comes out early enough. Every DLC character will take a ton of work. In fact, I think Sakurai might try and concentrate on more type differences just to make them stand out better. I don't honestly think Squirtle was cut just because PT didn't work, but with Greninja, part of his role is still covered. And he was interesting to him already, and there was great variety with Charizard's revamping already. Likewise, let's not pretend Sakurai doesn't attempt to represent multiple Gens at once. If Gen 1 was severely important to him alone, we wouldn't have each Gen vastly represented. It's not just characters. There's stages, music, and trophies. Of course Smash 64 had two Gen 1 Pokemon. No other choice. He easily went with a Gen II Pokemon as a clone as well, to show it off, plus other stuff related to it in Melee. Overall, if we get a DLC Pokemon character back, I wouldn't be surprised if Pichu got the spot instead after Mewtwo. Easier to do, nobody damages themselves as an overall mechanic, is still iconic and pretty much Gen II's mascot, and yes, was missed by many.