I think it's fair to say it's probably an intersection of relevancy and Nintendo history, though. A third-party character is more about the relevancy, which is why we got Cloud instead of a less immediately recognizable SNES-era FF rep or something. Like I said above, it's a combination of factors. Nintendo's own franchises they paint with a broader brush, but that's because it's their stuff.
Do I believe Banjo-Kazooie will join the Smash Bros roster? No, it's very unlikely. It's not impossible, but it's not likely either.
But there is (surprisingly) a lot of N64 nostalgia happening right now, and adding Banjo-Kazooie as future DLC would be a smart way to capitalize on that N64 nostalgia. Not only did Banjo have two N64 games, but he was a playable character in Diddy Kong Racing.
Year-after-year, vintage game retailers are saying that Nintendo 64 is their best selling console. Not the NES or SNES or anything Sega.
From Kotaku, last year:
Sellers of vintage gaming hardware said they noticed a boom in Nintendo 64 sales this holiday season, a shift away from the previous generations of consoles that Christmas shoppers had coveted years earlier. Storeowners, online sellers, and repairmen I interviewed said that in the months leading up to Christmas, Nintendo 64s were hot commodities, especially among 25- to 30-year-olds who'd grown up with the system.
"We easily sold over a hundred," said Daniel Mastin, general manager of the independent store Video Games New York, as he stood in front of a glass showcase stacked high with Japanese Famicom cartridges and neatly arranged Game Boy Color boxes. Over the last few years, Mastin said he has noticed a slow movement away from the Super Nintendo Entertainment Systems that had dominated Christmas sales years ago at his New York City store.
"This was the best year for the 64 to date," he said. While we were chatting, the phone rang. The caller, who had just received an N64 for Christmas, wanted to know whether Video Games New York still had controllers.