Don't forget the presence of assist attacks from pokemon unfit for use as a main character. I'd love to see something like Jigglypuff or Wobbuffet.

The luchador Pikachu is a reference to the contest costumes for Alpha Ruby and Omega Sapphire. Each of the five contests (Smart, Cool, Beauty, Cute, and Tough) unlocked a special costume for Pikachu that gave access to an exclusive move; the Pikachu Libre costume gave access to the Flying Press move (a hybrid Fighting/Flying attack).

There may be 722 pokemon, but a decent chunk of that list is basic and middle stage evolutions. You can further reduce the candidates by removing see things like the keychain, ice cream cone, and pretty much any pokemon not based on an animal (see Honedge). I think Suicune is the only quadraped listed thus far.

LeshLush wrote:

Even if we chop it down as you propose, there's gotta be way more than ten pokemon that would fit in a fighting game. Off the top of my head, Electabuzz, Golem, Mewtwo, and Jynx would totally fit.

No arguments with those options, other than the fact that Electabuzz was given a held-item+trade evolution in the 5'11" Electivire:

Looking over each generation, and ignoring if they've already been confirmed, here's who I would include:
Gen 1: Venusaur, Blastoise, Charizard, Sandslash, Nidoking, Nidoqueen, Persian, Primeape, Arcanine, Alakazam, Poliwrath, Machamp, Tentacruel, Golem, Farfetch'd, Muk, Gengar, Hypno, Marowak, Hitmonlee, Hitmonchan, Lickitung, Kangaskhan, Mr. Mime, Jynx, Scyther, Pinsir, Ditto, Kabutops, Snorlax, Dragonite, and Mew.
Gen 2: Feraligater, Ampharos, Sudowoodo, Scizor, Heracross, Granbull, Donphan, Hitmontop, and Tyranitar.
Gen 3: Blaziken, Swampert, Ludicolo, Shiftry, Gardevoir, Slaking, Shedinja, Exploud, Hariyama, Sableye, Mawile, Aggron, Medicham, Grumpig, Flygon, Cacturne, Zangoose, Crawdaunt, Salamence, Metagross, and Groudon.
Gen 4: Infernape, Empoleon, Rampardos, Vespiquen, Lopunny, Honchkrow, Purugly, Garchomp, Lucario, Toxicroak, Abomasnow, Weavile, Rhyperior, Electivire, Gallade, Froslass, Magmortar, Ambipom, Dusknoir, and Darkrai.
Gen 5: Emboar, Samurott, Gigalith, Excadrill, Conkeldurr, Seismtoad, Throh, Sawk, Krookadile, Darmanitan, Scrafty, Cofagrigus, Caracosta, Zoroark, Gothitelle, Escavalier, Eelektross, Haxorus, Beartic, Mienshao, Druddigon, Golurk, Bisharp, Hydreigon, and Genesect.
Gen 6: Chesnaught, Delphox, Greninja, Pangoro, Clawitzer, Heliolisk, Tyrantrum, Hawlucha (yes, a hawk pokemon whose whole gimic is lucha libre), Goodra, and Trevenant.

That totals out to 139 of 721, roughly 1/5th of the entire Pokedex.