Funnily enough I have been thinking about how Nintendo could do Mario Fps recently. I think for it to work they need to take a similar direction that they took with Mario Kart against the more violent weapon based Racing gaming genre. Make a more children friendly FPS in terms of the level of acceptable violence. Which is actually quite simply to do, as all you need to do would be to replace the standard guns setup with the existing Mario power system. So instead of machine guns, etc you can get the Fire Flower, Ice Flower, Hammer Suit & Boomerang Flower as your projectile weapons. You could also mix it up by making jumping ever presence in the game. So you need to jump to navigate around the level and you could also defeat a competitor by jumping on their head in the old Mario Fashion as another option.