Doesn't matter what you personally think. Many items are very unfair.
All it takes is for a powerful assist trophy or master ball to spawn near someone, which is not uncommon, and spawn positions are random. Same goes for recovery items, as someone can randomly obtain a heart container. Then there's the Starman which also spawns in random places and grants total invincibility. Smash balls can be acquired by accident. Explosives can spawn next to someone right as they perform an attack. There's too many factors that make items unfair due to their randomness and ability to transcend the rules of the core game.
Then there's stages with hazards that interfere greatly with the core gameplay, and can turn a fair competitive match into a massacre for one person having made a small mistake that would otherwise not be so terribly costly.
Team matches, even without items and regular stages, are a very different form of competition than one on one. It's a different test of skills and can severely hamper two otherwise good players who do not work effectively together, especially if their mains do not mix well, whereas their opponents can have a killer combination even if they would otherwise perform not so well individually.
This means that, given your setup, the fair, truly competitive matches will be given to players on a nearly random basis because the first rounds filter any players, good or bad, by unfair, anti-competitive design. This makes for a very lousy Smash tourney. The final rounds could end up being between very skilled players and not so good players, instead of boiling down to an interesting bout between those who performed the best.