Crap as a fighter, crap as a port.
I might as well start with the positives. The sound is good, SSBM theme and all.
The good stuff stops there.
As a port it fails because you have Sonic overload. I've never been much of a Sonic fan, but even for those who are, they don't need Sonic, Tails, Knuckles AND Super Sonic. SSB and SSB:M never gave any game 4 characters. And the Sonic clones are just stupidity incarnate. Sonic clones are moronic, and definitely shouldn't be in this game.
Now, for SSF as a fighting game. There are so many things wrong with this game in terms of balance I don't know where to begin...
Well, first off, what the hell were you thinking making some characters have JUMPS which are actually ATTACKS?! It's fucking stupid. Blade/Samus/Sonic/Knuckles/Sup er Sonic especially/Mario/etc can just jump and spam left-right-left-right, doing ridiculous damage to everything. You are NOT supposed to be able to beat the two Master Hands without taking any damage, damnit! Even the fastest attacks have recovery times, but your jumping attacks hit at every point during the jump! As if Super Sonic weren't overpowered enough.
Onwards with the balance issues. Some characters are more powerful than others. That's to be expected in any fighter, but not to this degree. Super Sonic owns all while Mr. Incredible is pathetically weak. Pikachu can never be blasted offstage to the left or right because his smash attack cancels out his previous momentum instantly; the same goes for Kirby, to a lesser extent. Knuckles' downward smash attack....no. Just, no. Stupidly broken.
All in all, as a fighter this is about as unbalanced as XvSF, except Cyclops is replaced by Knuckles, Juggernaut becomes Super Sonic and Gambit is Pikachu. Hell, you even made some people have ridiculously easy target tests while other melee-only characters have to chase down targets which are zipping about the room too fast to track. Quite annoying.
So, yeah. Get rid of all the stupid Sonic shit to make it a better port. Then...I dunno, revamp the entire fricking engine to make it a half-decent fighter. But if all you want is for it to be a nostalgia-trigger, harkening back to the good ol' days of SSB, then at least get rid of the Sonic overload!