neat idea. I remember some santa outfits for link, toon link, peach, and maybe dedede. Someone could even use Mario's "Link" costume and turn his hat into a santa hat; pretty much making santa also on mario. I'm not quite sure what else to recommend, although some old fashioned victorian style outfits may fit the theme well, adding an "A Christmas Carol" atmosphere; there are some tuxedos and whatnot that could be used. There was this really neat "Snowy Bridge of Eldin" stage not too long ago, that would probably also be good to include.
Spongebob has already been done on Metaknight (armed with a spatula). As for the others, I agree; it's going to be hard to find people to do this (although a zombie teletubbie would look rather wicked).
I think that the person only requested it, I'm not sure if he/she was going to make it.
I was looking into making something similar myself; I noticed that it would be hard to make Dededoo since DDD's outer coat is way too far apart in the front to look like a jacket; if it was smoothed out into his body it might work. I'm not sure if you're able to do that, there probably are some issues that would make it difficult.
Regardless, nice job. You have a lot of nice vertexes here.
you should throw in a taunt from another character (I can just see Mario doing of ZSS' taunts, or maybe peach's singing one... lol) even fox's up taunt would look neat I think.
Lyn looks amazing; great work on the animations, keep up the good work. It'd be really awesome to see a video of your progress.. but don't feel obligated to make one if you're busy.