Looks neat! It’s made by the Sonic Mania devs and was pitched to Capcom who have rejected it, unfortunately. There’s also a link to a playable demo for PC/Mac/Linux in the info section, not tried it myself but already wondering how it would look on a CRT with scanlines.
Umihara Kawase Duck!
Hmm, why not just make it a new character to remove rights issues?
They might believe the game would sell better with a license, and that demo may be their way of forcing Capcom’s hand, if it’s well received by the public and the press.
Sometimes with a passion project part of it is linked to the thing you are trying to make, not just making a something great.
There is also an appeal to relying on an already made design if making original idea’s come harder to you. Just because they are really really talented at making games doesn’t mean coming up with the design ideas come as easily to them. That’s no put down or judgement about making something “original”, they are clearly world class at what they do.