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Nintendo characters could work in a Vs Capcom game. But such a game really has no need to exist given Nintendo fans that like fighting games already have Smash Bros for the crossover appeal and those that like Capcom games will probably barely care.

If you are going to use the resources on a brand new game from Capcom, better it is a continuation of one of their own many classic fighting game franchises (outside of Street Fighter due to the issue with SFV being PS4/PC exclusive).