Of all the things wrong with Sunshine they have a lot more to do besides just aiming. *ESPECIALLY* when it comes to Yoshi.
The hitbox thing is an interesting point, but is it really ABSOLUTELY NECESSARY to have a hitbox as small as Mario to get past any particular puzzle? The only problem areas I see are when crouching is required, which is rare in a 3D game, and even when needed, who's to say Yoshi couldn't manage? Have you seen the dino's duck in Smash; rather than crouching, he lays flat against the ground. If Mario did the same, perhaps sliding off-center on the saddle as well, I think they could get down about as well as Mario's crouch. For any other situation the hitbox could just be a trade-off.
Spinning for extra height actually works in Yoshi's favor, since the flutter-jump has long since been a signature of his and carries a far greater impact (in a way it actually feels odd to me to return to SMW since he didn't have it back then). Wall-kicking is perhaps the most awkward thing, but we do know already that Galaxy 2 is introducing the inflatable Yoshi, which could be a great work-around.
I would also point out that the occassional required jump-off needn't enrage Yoshi's fans, so long as he's waiting for you when it's over. Remember that in World Yoshi was unable to use vines and P-Balloons, and also was more limited in his use of other things such as triangle blocks. USUALLY (save one stage in Valley of Bowser, IIRC) it was no big deal. You either did what you had to do and came back for the little guy, or if the stage permitted you made good use of your Blue Shells.
Speaking of which, I miss the wings.
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