Dammit I made a huge explanation to my post in an Edit and it all disappeared ^^;
Basically I explained that the average player doesn't have a fantastic connection as most gamers are passive (or "casual" for want of a better word), coupled with the fact that WiFi in the western world is still not amazing, tons of States and parts of Europe have either very expensive good WiFi or their WiFi otherwise isn't so great in their area yet, as opposed to Japan where WiFi is and has been impressive for a while. Even people who imported Smash from Japan were able to play many great lag-free games with Japanese players because most Japanese players have a good connection as the average quality of WiFi there is far higher.
It's also to do with the kind of game Smash Bros. is. Unlike the grand majority of games, Smash Bros. needs to send essential information both uploading and downloading at every single opportunity because Smash is a game in which the player's moves and attacks can change quickly on both the X and Y axis. Most games and even most fighting games don't require inputs to be sent as quickly, a traditional fighting game has a very limited Y Axis with most characters either having the same jump height or set jump heights depending on what button combination is done, whereas Smash has free and fast analogue movement in the air that can lead to any combination of attacks. Racing games on the other hand can fill in information gaps with AI to make sure a player gets from where they were a bit ago to where they are now. This is why when a racing game lags out, the player appears to jerk all over the place and teleport around, the game is using an AI to fill in the information but can't get their placement right. With Smash Bros. precision is essential for the game to even work, so the whole game slows down instead.
If that made sense, it should hopefully explain why Smash needs better connection to work well than most games. Other modern fighting games also have troubles on consoles, to the point where some fighting games even have options for practising with button lag settings on.
Basically if you want to have great matches on Smash, it has nothing to do with the hardware power or the CPU limit or anything, it's all about the players' connections. If you want to have good solid matches, all participating players need a good connection. Chances are that anything short of making dedicated servers for the game (which isn't common on consoles outside of games with 16+ players) isn't going to make the online considerably better. Tinkering could help make things smoother and I hope it gets patches for stability and such, but connection is always going to be the main factor for a game like Smash. The Wii U version will likely be largely the same.
( Edited 05.10.2014 19:09 by SuperLink )