After working on Super Smash Flash 2's netcode and doing tons of research, I can explain exactly why Smash netcode "sucks", and it's by design. It's intentional.
Wondering why Brawl has so much input lag? That's exactly how delay based online works. Either your entire game is extremely visually choppy all the time or the game buffers up controls to offset the visual lag underneath the cached threshold (ex. the game will buffer 3 frames, then when lag is < 3 frames and the game is receiving no inputs from the foe, it will use what's buffered to smooth it out as it waits for more inputs, and repeat). This helps prevent the game from locking up while waiting for your opponents controls to get in, it can't continue without inputs from both players to use, because what would happen would be nonsensical and incorrect, causing a desync. If it didn't buffer the controls for as long, you'd see more visual pausing.
You're in the UK and chances are Sakurai is doing it with the latter method (the first would be completely unplayable) which means that your delay is likely around 6 or 7 frames since it takes upwards of 100ms at 16.667ms/s (60 FPS) to deliver the signal across the ocean, assuming you're playing someone in the US. Normally the tech will round up the necessary calculated input delay because internet connections have "jitter", or are unreliable in delivering their connections in a consistent amount of time. Nobody this time around has mentioned very many visual lockups, so I'm thinking it is dynamically scaling, unlike Brawl (we'll get to that later).
What most fighting games do to offset this input delay is use "Rollback" technology (GGPO is rollback, which is one of the most praised systems for online) but that simply will not work in SSB. The way that rollback works is, if a control input isn't received in time, the game will continue without your opponent's input, doing something likely wrong, and it continues sending yours, and then once the connection stabilizes, it will mathematically process what happened over the lag spurt by taking what's on your screen and meshing it with what's on your opponent's screen to get a conclusion. In practice it feels completely lagless since what you're doing is reflected instantly on your screen and the game will never lock up to wait for your opponent if there's lag, and in ideal conditions you won't even notice the 1 or 2 frames of incorrect movement, however at higher delay it is a huge issue because you see people teleporting around and hitting the air will end up hitting you. Have you ever been playing COD or Halo and shot in front of someone and got a headshot? Rollback technology is why. Hence...
In SSB, rollback WOULD NOT WORK, especially not across an ocean. Think of a traditional fighting game - most of the frame-tight inputs are on your end, not things that rely on responding to your opponent. Smash is different - things don't all have set knockback and set strings, and we have things like edgeguarding and DI. Losing 6 frames of input as it travels from Japan to the US would look like your opponent missing their recovery completely, falling out of bounds...and then when the connection catches back up they would appear onstage. You can imagine how aggravating that would be to play against. It wouldn't be slow, it would be completely unplayable. Players would also be teleporting out of your combos as DI is received and the game goes back to add the DI on after lag spurts. It would be an AWFUL experience.
And for those of you wondering, I suspect that Brawl had a constant delay rather than one that scales. This means that even if your connection is perfect, you would still have the same amount of input caching (or input delay) as a bad connection. If your connection is WORSE than bad, you'd have lockups that last tons of time, and the same amount of input delay. SSB4 might be a scaled system where it calculates how much delay is necessary on a per-match basis, but that's really the only place Brawl could be improved over. The Wii U also has a better wireless card so that should help a bit too.
tl;dr Sakurai can't recode the internet to make the pipes faster than the speed of light. When you play with people with low pings/people that live close to you it will be a better experience. People complained about Brawl's netcode so much but nobody really took the time to figure out WHY it is the way it is. For delay-based online, it seems to have been coded near-optimally.
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