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I think they could easily fill a roster of about 20 to 30 characters without relying heavily on characters from third-party studios. They'd just have to ignore popularity and relevance, as well as dip a lot of times into one game. With Rare's contribution, one could easily come up with half that.

Conker
Banjo&Kazooie
One of the heroes from Jet Force Gemini
Kameo
Joanna Dark
Hero from Grabbed by the Ghoulies
Merge the three robots from Blast Corps into one.
One of the Battletoads
One of the humanoid characters from Viva Pinata using the animals as attacks
Several characters from Killer Instinct

As for non-Rare characters.

Maybe the four heroes from Sudeki
Blinx
Picaro
Master Chief
Avatars similar to how Miis function in Smash Bros.
Hero of switchable gender from Fable
Several characters from Lost Odyssey


I'll probably post later, about how I imagine their move set would be.