Like, did people have an amnesia and forgot Animal Crossing is one of Nintendo's biggest franchises and she's literally popular?

That is essentially how Shulk made it to Smash as well. The game was not particularly old at the time and the franchise was not exactly iconic yet, but Xenoblade Chronicles did so well in so little time that they just had to. And now look where the game is.

Never question Sakurai's judgement, people.