I quite like this idea. A new item. Here's my spin on this:

It could let you perform an attack unique to the character, but much weaker than a Final Smash. The item limit on field could be 1, 2 or 3. A character already under the effect of the item could not pick another one up before using the special attack it provides (by pressing the "B" button, breaking a Smash Ball would override this item's effect).

For example, Mario could create a small stream of fire that homes in on an opponent, causes no knockback and lasts 5 seconds. The variations for other characters could also follow a similar style, focusing more on a new style of attack rather than dealing massive damage or knockback like the Final Smashes.

I wouldn't do fire though, because it is too much like his FS, why not something like propeller suit/bee suit, or penguin suit, maybe even like the Tannoki suit (i think I spelt it right.

While I know where you're going with that, a suit change would require way more spriting than an attack effect. And besides, Mario DOES use a lot of fire in Smash games. This way Luigi could have an electric shockwave or something, just to include that ability of his in the game.

And if not a fire stream, maybe something a little more physical, to better differentiate from the Final Smash? Actually I think that is for the better, but I can't really think of anyth- Mario's fists set on fire and he slams the ground (first hit) creating two quick but short bursts of fire going both forwards and backwards (second hit). If caught in the initial hit, the opponent is trapped until sent flying from the fire blast (though not that much more powerful than his side smash).

Now thats unique, I like it.

What I thought Taco was stabbing at was

an item exclusive to the character grabbing the box. Such as if Ganondorf grabbing it, it'd turn into his sword, or Ness getting his slingshot, Waluigi getting a tennis racket, not a watered down FS

I know, but in some cases that would lead to even more unnecessary spriting for holding the items (Ganondorf could use the same sprites as for the beam sword, but Ness would need a new one for the slingshot, plus a shooting animation).

Well, maybe when Mario can get the flower, he can convert us it, but when its out, Mario slams it down, and the fire burst comes out.

Wouldnt adding basically a new move need more sprites aswell?

Only for the single move, not for movement or other special features.

Both ideas seem a bit tedious. While I'd love that Signature Item Box (Granted, I'd have my own choices compared to that list up there), it seems like a whole lot to sprite. So I'm gonna hijack this thread and pitch by greatest idea ever:

Master Trophies!!

Instead of the B-list characters, it summons one of the playables (who isn't being played on the field), and has them either FS the enemy or has them do a brand new FS-like move that can only be done with said trophy (which would require even more spriting).

And now I've added another ultimately pointless item idea into the fray. LET THE BATTLE COMMENCE!

TG for some reason your idea reminds me of those tag team moves in MvC

And then you'd have to make the game scan which characters you have unlocked (not that we didn't have to do that with Assist Trophies). I don't think that's necessary, there's no need to summon a playable character not in play with an item as we already have Assist Trophies serve that purpose (just not with playables).

The Master Trophy is actually an idea I put legitimate thought into a long time ago. I pictured it doing a new move for each character that was Final Smash-like, but was a new move that could only be done through summoning with a trophy, representing stuff that maybe a character couldn't represent because of the limitations of one final smash.

For example, I thought a good move for Kirby would be his Nova power or Mic power (Those powers with limited uses, like Cook is), or for Luigi he utilized his Poltergust, or Bowser boarded his Clown Car or Airship and bombed the battlefield from above. Stuff like that.

EDIT: And this is just a random suggestion in the same vein as the others in the thread. They're decent ideas in theory, but in practice, are we really gonna be able to do ALL that?

Yes, I think that is a good idea as long as the Final Smash is still the more powerful one (in some cases that's not applicable though, such as with Luigi). The Smash Ball is emblematic and should remain the most powerful item in the game.

Well what if it looks the same as an assist, and it randomly selects a charcater, unlocked or not?

Itd be less codin probably, and wouldnt give off secrets on locked characters, because they may think its just an assist?