I've listed the top 50 characters who could be in the game; now here's a list of characters who I think SHOULD NOT be in the game, for one reason or another:
Waluigi, Daisy, Birdo, Petey Piranah, Etc. (Mario Bros. series)
Sure, it's okay to have characters like these in a Mario spin-off title. But remember: Smash Bros. is not just about Mario. With so many series who still have main characters that can be in the game, third-tier Mario characters seem like a complete waste of space and time.
Okay...why? It seems pretty random that this one Pokemon gets so much support. Albeit, it is a starter Pokemon. But what makes this one any more worthy than any of the other starters who preceded and proceeded it? Nothing. Plus, it's a giant chicken.
'Generic' Characters in General
Enemies, NPC races, whatever. Like I said before, there's so many unique and important characters yet to grace the game, there's absolutely no reason for them to include Koopa Troopas, Gorons, or Space Pirates.
Animal Crossing Characters
Unlike the other characters on this list, I don't hold that much contempt for the AC characters. It's a series that most certainly does deserve some representation in Smash Bros. I just don't think a character...works, really. It could be cute, but I think the series would be better served by an item or something.
Pichu Brothers or Plusle & Minun (Pokemon)
Seriously, there are better choices for Pokemon and replacements for the Ice Climbers if they are needed. Seriously.
Metroid Prime Hunters 'Hunters'
Take one part 'too early', two parts 'there are more important and interesting Metroid characters they could put in', and finally a dash of 'they are lame'.
Any other Kid Icarus Characters
Really not that popular, but it still must be said. The game needed to be represented, but Pit is all we really need to fulfill that need. Also, the Eggplant Wizard as an item/pop-up, but more on that later.
Human Pokemon Characters
Who wants to play as a human character from Pokemon? Better question: WHY? They'll just end up having Pokemon do all the work anyways, so why not just stick to who we REALLY want to play as, and cut out the unnecessary baggage?