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Mr Khan said:
It's ironic that this sounds like the story of Super Smash Bros in reverse. That game was originally a fighter similar to The Outfoxies with random characters, which Nintendo decided to slap into a mascot fighter to boost its appeal.

Actually, it was Sakurai's idea to put Nintendo characters in the game. Nintendo was hesitant to do it, but he thought it would be more fun.

@OP, well that certainly explains some of the Unite Morphs. Fist = Mario, Sword = Link, etc.