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Some of those characters the OP wants to cut are the coolest characters. Terrible idea to cut the coolest 3rd party characters.

I think next Smash should be something entirely different. No idea what that would be, but it just seems like it'd be weird to release another Smash in the exact same style after we already got Ultimate which feels impossible to top, and just continuing to add more characters doesn't seem like a good idea either.

Maybe on Switch 2 re-release Ultimate with updated graphics and all the DLC included - that'd be an easy way to sell 10 mil copies without much effort, but then start a whole new style of Smash with a new game. As Dulfite said, a new phase of Smash. But i don't know what direction that should take.

Hell, a crazy idea is to just incorporate Smash into Nintendo's Online Service as the final Smash game they ever make. It would make their online service a must have premier service and they could just keep adding characters, levels, story modes, etc to the game over time, without needing to keep trying to up the ante each generation compared with the previous game. It could be an ever-expanding Smash game, and throw in the seasons concept to keep it fresh every 6 months or something. I actually would like this more than them trying to reinvent the franchise and take it away from what we all love, or continuing to trying to just redo what they've already done but with more characters every gen.