@MarshReaper replicating the hook of Smash seems unfeasible (your favorite characters smacking each other). Finding libre characters isn't hard but finding ones to fit the gameplay might - is having Tux the main appeal? I would look at what other clones have done and try to replicate them but with a twist.
Maybe the twist could be something to do with it being FOSS. Like you can "read the source" of the opponent, or modify your character's abilities per match.
Mix and matching sounds like a cool idea. Although, we will need to figure out balancing for this system as well.
@MarshReaper a rock paper scissors approach could be a good choice. If it isn't a core mechanic then yeah it's just extra complexity (not worth having to start with).
You can always rely on classic literature and mythology. Ancient Greek/Norse/Egyptian gods, for example. Dracula and Sherlock Holmes would probably be interesting enough to include. Throw in Steamboat Willie to rub in that copyright expiring.
Oh also make sure there’s an extensive API to let people add their own characters. Let others add in clones of the copyrighted smash characters as a separate smaller project so if Nintendo decides to drop the hammer the main project is unaffected.