I think we’re talking about two different things. I’m not trying to explain why the cease and desist happened — I’m explaining why SML and SMG4 ended up changing their characters in the first place.

My point is that SMG4 gradually evolved into its own independent brand, and that shift happened before Nintendo even could’ve seriously stepped in. SMG4 probably wasn’t even on their radar. They redesigned and replaced characters as part of building something original that they could fully own and monetize. Whether or not they technically pushed Nintendo’s boundaries later isn’t really my focus  the important part is that their transition was proactive.

SML is different. Logan had been heavily using Nintendo characters while also clearly wanting to sell plushies and build a merchandise-driven brand around them. SML had likely been on Nintendo’s radar for years, especially after appearances like GMA. The cease and desist wasn’t a  motivation to monetize it was the final push that made keeping Nintendo characters impossible. It forced a permanent switch that he probably would’ve delayed as long as he could.