And the main issue with Impa replacing Sheik is that it's a drastic change, which is what you Impa fans seem to not understand.
Zelda and Sheik have the same exact size and weight. Impa is much taller than Zelda, and given that she's as skinny as Waluigi, she would be lighter in comparison to her.
Already, the balance is shifted.
Removing the "transformation" gimmick (quotations because at this point, it wouldn't really be transformation) would take away from Zelda. People may act as though as this would just make Zelda better DURR, there is no guarantee that it will happen. The problem with Zelda/Sheik was Zelda, not Sheik. Removing Sheik is not going to fix the problem; the problem lies with Zelda.
And then there's the concept of Impa as a seperate character. The only way she can possibly preserve Sheik's moveset and playstyle is if she actually copies it.
We move on to changes like Diddy proposes, and it's lost forever.
We make changes that are needed only because Sheilda is broken up, and it's not really the Impa the Impa fanatics want.
Either way, Impa would never be just like Sheik, given the size and weight issue I brought up earlier.
It's a lose-lose situation.
Which is why the best option would be to revamp Zelda and make her better, keep Sheik, and make Impa her own character with her own set of moves. Where as Zelda/Sheik would be the "Mage vs. Ninja" fighter. Impa would be the best of both worlds, being both a mage AND a ninja.
EDIT:
Then there's Diddy's piss-poor excuses.
"As the Zelda / Sheik duo character idea just doesn't work. It's inbalanced, and not even unique anymore."
This is utter horsecrap. For one, the Sheilda fighting style does significantly better than Sheik alone or Zelda alone in matchups.
And two, no other character is able to switch forms at will with the press of a button command, as I've already explained (but little Diddy don't listen to anything that makes him wrong).
Samus can't turn into Zero Suit Samus and back again at will. This requires a Final Smash. At most, Samus can turn into Zero Suit using a rapid flurry of taunts, but Zero Suit can't turn back, making Samus impossible in typical no-item matches once Zero Suit is in play.
Pokemon Trainer? Switching through multiple Pokemon is a required mechanic due to the Stamina gimmick. Also, Pokemon are automatically switched out when KOed. A Zelda player can switch to Sheik whenever they want with no negative side effects and vice versa.
"Might also be the reason she was scrapped from Twilight Princess. Cause fans would know Sheik = Zelda in an instant, and it would spoil the plot immediately."
It's not so much the fans as it would be that it would be useless due to Ganondorf. A Zelda evaded him once using the Sheik disguise. Another Zelda doing the same thing would be obvious to him, making a far easier capture.
Unless you're under the impression that Ganondorf would be stupid enough to fall for the same trick twice.
"Hence she also wasn't even planned for Skyward Sword, but another Sheikah, Impa did make it in. See where I'm getting at?"
She wouldn't make sense in SS, because Ghirahim can sense her presence, something Ganondorf seems incapable of doing (couldn't tell Sheik was Zelda until she revealed herself to Link, had to kidnap every pointed eared girl because he couldn't tell which one was actually Zelda and didn't find out it was Tetra until he tried to strangle her, etc.).
If Ghirahim was near the disguised Zelda, he'd tell right away.
"If you want a transforming character, root for Toon Zelda and Tetra."
Except that unlike Sheik, Tetra is just how that Zelda was raised. She cannot voluntary transform between the two; Daphnes Nohansen Hyrule is the one that made her appear as Zelda, and his magic wore off when he drowned.