Never heard of Isabelle until yesterday, who is a character in a kids game. So Waluigi is easily more popular
Animal Crossing is mostly popular with adults, who after a busy week want to live a simple town life. It's especially a hit with older women.
So it might be that you aren't in the target demography and missed it. It's part of Nintendo diversifying its protfolio to broaden its audience. A new generation of Nintendo games.
Despite having fewer entries, Animal Crossing main entries sell at the same level as Zelda games:
https://vgsales.wikia.com/wiki/Animal_Crossing
https://vgsales.wikia.com/wiki/The_Legend_of_Zelda
It has also a lot more merchandise potential with cute animal plushies, edutainment potential, as well as an anime,
so it has appeal outside of games as well, for non-gamers.
Due to that I would put Animal Crossing in or close to the top 3 most lucrative IPs for Nintendo at the moment.
(If I exclude things like Mario Kart that I consider as a subset of Mario, and Pokémon which is not exclusively a Nintendo IP.)
Isabelle is the announcer/tutorial/helper for the 3DS game, as well as a likeable character and how you access any mayoral functions troughough the game, so she has a very strong presence
for anyone having actually played that entry. She is proeminently featured in all the Animal Crossing-related marketing. She took Tom Nook's place as the serie's face since the last entry in all spin-offs. She has TONS of fan-art, especially in Japan. More than Waluigi for sure.
If you missed Animal Crossing's growth, you might be out of touch with modern Nintendo
and non-stereotypical gaming in general.