All I want is overpo-Meta Knight. Just give me Meta Knight and we'll be good, Sakurai. He was the coolest character from the Kirby series in Super Smash Bros. Brawl and I don't know if I'd be able to live without him.

Mewtwo slamming Ash around with its psychic powers earlier in the movie was completely intentional and stealing the trainers' Pokemon and cloning them to take over the world also was intentional. Ash's sacrifice may have made Mewtwo rethink its plans, but it still was the villain for the majority of the movie.

Funny story, the whole "take over the world" thing was added by 4Kids because they didn't think American kids could follow a story without an obviously evil antagonist. In the original, Mewtwo just wants to prove that clones can be just as strong or even stronger than the original beings they were cloned from. He's trying to justify his own existence. MEW of all characters eggs him on, telling Mewtwo that, as a clone, he is a naturally inferior life form to Mew. That's why they fight. Mewtwo beats Ash up a little bit, but he didn't mean to kill the kid, and Ash was probably asking for it.

I don't think Mewtwo had any outright villainous intentions in the Japanese version. I think he was just confused, angsty, and heavily drugged by Team Rocket.

Need more villains. King Boo could be good, although with Kirby and Jigglypuff (assuming it's still in) that might be just too many spherical objects bouncing about.

Tatanga, on the other hand, would be awesome, but the chances of him appearing on the roster would be zero.

I don't know what would happen to Nintendo's rep if a charactor who is basically bi (especially in the japanese version) were included in smash.  But I agree, a character from awakening would be awesome.