How does this happen. Oh wait, I know how it happens, why do people believe it? Its like playing telephone on an elementary school playground - what was originally said is never what is at the end. This isn't the X-Files, conspiracy does not exist at every fucking turn.
TheTanooki.com, a blog I like to check on every couple days or so, is running a rumor they pulled from some other
random site called DPad that is buying into a rumor about Square-Enix being the cause for the initial Smash Bros Brawl delay due to copyright issues over the Super Mario RPG character Geno. Supposedly he was a playable character and Nintendo had to remove him far into development because Squenix owns the copyright and they couldn't close the deal.
This is based on pure scuttlebutt and that the random spot on the character select screen is under the two 3rd party characters. Some
douche bag made it up and now its spread. The fan base is so rabid for this game and the outcry for every 3rd party character ever created to be in there that these ramblings and rantings of fans are getting out of control.
These are facts that must always be remembered:
1) THERE ARE NO OTHER 3RD PARTY CHARACTERS IN BRAWL - ANYWHERE.
2) The playable character list has been set for months upon months - the most recently delay had nothing to do with adding/subtracting playable characters, and I am almost certain - 99% so - the delay before that didn't as well. Content-wise, the game has essentially been finished since Novemberish - the testing process just took forever because Nintendo is anal and wants every one of their titles - especially one of this magnitude - to be polished to a point where the sun's reflection could blind small animals and infants in a matter of seconds.
After Sonic was announced as a playable character, all the massive secrets were out of the bag. That's it peeps. So stop believing the lies, put down the torches that Cloud or some other jerk is in the game and focus on honing those Smash Bros skills with the characters that ARE in the game.