On the character/function thing, I think there’s a balance between it. It’s the “Nintendo and eventually some other video games” fighter, so that general field can hold some bearing, some could get in for function, some could get in for character, but also think about what said character has to offer and how to express it.
Characters matter to some degree, otherwise, why even bother with making a “dream match” fighting game about Nintendo characters, and not just the Dragon King prototype with the blank 3D models? (That itself could be potentially interesting if you had each of the other characters be different general shapes while retaining that sort of aesthetic, but that’s a different subject.)
That said, I’m completely for unconventional picks, from a “representation” standpoint and a “function” standpoint, as well. A lot of “safe” picks tread on some similar grounds to what’s already on the roster, aside from maybe a few. I guess I’m interested in “novelty” in some’s eyes, but I do like variety to a degree, distinction, sometimes name value, but prioritize the “names” and some obscure ones that substantially add. What that is is in the eye of the beholder.