I just tried out this PSA out and I must say it's pretty damn smooth. I like how you incorporated your cape mario with the SMBZ aspects. It does seem like you really capitalized on the hammer though. SMBZ Mario does sport a lot of different attacks besides those but many of those are a little over the top for Brawl I suppose.
It might be a bit late to change but I would like to see the strong punch Mario tends to use as either his forward air or his forward A smash attack. It's the move where he pauses for a second after winding up, has a small light flicker by his fist then punches. An example of it is when he punches the Red Koopa Bro through the mountain in the fight they have after the Koopa Bros steal the chaos emerald.
Since Mario throws out so many hammers with his neutral B have you considered making them stop bouncing after maybe one bounce? It would make them feel a bit more weighty, a little less like the fireballs, and would balance out the fact that he can throw out so many in such a short period of time.
This is something I would like to see just for aesthetics sake: when Mario dons his cape or the fire ability how's about he reaches into his pocket and pulls out the cape feather or the fire flower? He could just hold it for a second then transform into the appropriate form. It would slow down his transformation just a bit but it would make it feel more like Mario is changing costumes properly.
Since you mentioned having an interest in eventually making a PSA for SMBZ fire Mario I figured I'd post some suggestions for what I think would work for him.
I was thinking for Fire Mario's Down-B why not make him rapidly fire small fireballs in all directions while he's spinning around. Sort of like how he does in Mario World but with many more. Reduce the damage that each one does for balancing sake.
Some good examples of attacks Fire Mario should retain are in the fight on Yoshi's Island. Mario attacks the Red Koopa after just getting the Fire Flower. Here are the moves I have in mind and they are really all just in one series of attacks Mario does in the scene:
Dash attack- Mario dashes forward, stands with a wide stance with one arm behind his back and the other punching the opponent in the stomach.
Forward A smash attack- A rapid series of punches to follow the dash attack up with. Keep pressing A to make him begin doing his rapid spinning attack. That or make the second half his down smash. This whole attack would also work as an AAA combo.
Up tilt- A simple punch straight up in the air.
Arial down tilt/meteor smash- a double fisted downward strike like the one Vegeta is known for.
Arial forward tilt- Just a kick with his body horizontal to the ground.
Here's a video showing the above listed attacks at 9:25
Up A smash- He puts his hand in the air and begin shooting fire balls vertically. If possible allow the player to control the direction he's firing by tilting the analog stick. This attack would be similar to the one he uses while fighting Mecha Sonic off of Turtle Shell Luigi's back. That's at 6:27 in this video.
Are your plans with this moveset to combine all of Mario's forms into one PSA and have a single comprehensive SMBZ Mario or are you just going to have several movesets with each featuring just one or two forms from the series? For example, are your goals to eventually have one PSA in which a button press can turn Mario into cape Mario while another can change him into Fire Mario and then another into the eventual Hammer Bros Mario? Or will each one have to be segregated due to graphical limitations with the Fludd?