What would the balancing be like? In Pokemon, the ability of each Pokemon is vastly different, especially compared to what it's like in a smash game. In Brawl, a well-played Ganondorf could beat a Meta Knight; there is no way in hell a Caterpie will beat a Rayquaza if both players are taking it seriously.
Also there are other problems. Wailord would fill up the whole stage, for example. Deoxys-S would be lolbroken because it would be impossible to hit and it would have zero lag on all of its attacks. Unown can't even have a moveset.
It's a great idea, but it'll need some serious tinkering for it to work.