hmmm, me wonders could the spectators mode actually be contributing to the lag? Think of how much data has to be stored on nintendo's servers just to be passed on, sounds like it could tie up the bandwidth, not to mention spectators mode works right away and online doesn't.
As far as online goes, i wonder how easy it would be to make a virtual console patch, say you download it and as long as you have real the disk then you just load it up under the channel screen and it has online improvements and maybe extra characters. This lag is ridiculous. StarCraft with battle net came out in 1998 frickin 10 years ago. Smash Bros online service is GREATLY INFERIOR to a 10 year old product.