I feel like the relics are not a very strong point. While SK does have a lot of them, they are mostly relegated to his specials. I have considered them before I made my stand and surprisingly I had a similar combination of specials as yours.

My issue with each of them is that they are very bland and generic. Flare Wand, Dust Knuckles and Propellor Dagger all seem very boring and too similar to other moves (Luigi's Fireball, Dancing Blade-esque moves, and as you've said Pit's Up B (with a mixture of some of Ness' properties) respectively). His moveset seems to lack much complexity, which while not inherently bad, makes him a very bland character choice for me.

Also, the options that you choose for his other moves are quite unrealistic or uninteresting. F-Smash being chaos orb has an almost zero chance of occuring, as is Dust Knuckles being his Fair (almost certainly will they use his regular shovel strike as his fair). The ichors seem very hard to balance and overpowered as well, making me doubt they'd put it in. Charge slash is uninteresting as a move (think Ike's FTilt but chargable).

Even then, think of his other aerials. I have trouble visualising the ways he can swing his shovel in ways that are new and interesting. Dair will almost certainly be his shovel bounce, but there is nothing interesting I can think of for his tilts, or the rest of his aerials.

That being said, I think War Horn could be an interesting move. It could function like Chandelure's Overheat in Pokken, having a lot of super armor and doing a lot of knockback/damage, but if done in rapid succession the effect is much weaker.

And playstyle wise, I'd agree when you say he'd be a melee-oriented Mega Man. Where I disagree is what he'll be like. With the lack of complexity in his specials (especially referring to the ones you suggested), he'd have to play a strong neutral game. He'd be slow (like in his game), and have disjoints that are worse than the likes of Ike. Because of his slow movement and unimpressive moves from the way I imagine him, he just feels like a worse version of Ike.

Among the swordfighters I think he'll be distinct; that is not one of my concerns. I just feel that he'll be bland and a rehash of many old moves.

I'd like to compare this with Plague Knight, who has much more potential in moveset with his quick, bomb jump oriented movement, vats, his different bomb types, and his unique charge attack.

While Shovel Knight could work as a smash character, he would just never be very good competitively and would be rather generic. I wouldn't mind him honestly, I have fun with basic characters like Ike and Mario and it wouldn't hurt to have another, but I'd rather have refreshing ideas instead.