It certainly looks like it. I would just hope that all of these FMVs wouldn't take up too much space on the disc. After all, if this is as in-depth as we think it is, that would mean that they would have to fit in a lot of FMVs, just because of all the various permutations and possibilities that could feasibly exist.
I mean, just thinking along the lines of what we know already, we've got several.
1) Mario vs. Kirby
-If Kirby wins, go to 2
-If Mario wins, go to 3
2) Following the Princesses joining, Kirby is flung away, leaving Mario to deal with Petey
-If Mario saves Peach, go to 4
-If Mario saves Zelda, go to 5
3) Following the Princesses joining, Mario is flung away, leaving Kirby to deal with Petey
-If Kirby saves Peach, go to 6
-If Kirby saves Zelda, go to 7
...and this goes on.
I wouldn't be surprised if there's also another split to be seen when you have DK and Diddy go against Bowser. Depending on which one happens, it may be Diddy getting nabbed by Bowser instead of DK. What that would mean for Fox, would then be left to the imagination...