What I don't understand is why didn't they go with something more Universally appealing.

Because the universally appealing dream matches are expensive and hard to do, due to rights, legal reasons, divided profits, what one company wants compared to the other, etc, etc.

The stuff that people want to see is a much more difficult and complicated process then bizzare like this.

The concept of crossover wasn't really big then but Capcom was making Marvel fighters (who also had cameos by Akuma and Anita as playable characters.) They probably just went from there from the cameos to a full out vs game.

Capcom did it because both the Marvel games and SFA games were done the CPS2 board and were done in similar art styles so it made sense to combine them in the perspective, but I'm talking about the idea of a Marvel Vs Capcom prior to Capcom developing Marvel games.

But basically what you're saying is that Capcom should've developed Speed Racer, G-Force, etc, games before ever attempting to do this.

TAS wrote:

Because the universally appealing dream matches are expensive and hard to do, due to rights, legal reasons, divided profits, what one company wants compared to the other, etc, etc.

And what you think this project will be easy or something?  They are crossing over with an Anime production studio.  That doesn't seem any easier then crossing with Arc System works or Sega.
I mean if they are gonna go for a big time Cross Over, why not finish Sammy vs Capcom or do another CFJ, Capcom vs SNK, 
or something like that?

Sammy VS Capcom wouldn't be as big as it was since Arc System Works left them. If it was Sammy Vs Capcom, it would have been Sega Vs Capcom since they merged awhile ago. It would be big but not Arc System Works Vs Capcom(old Sammy VS Capcom) big.

Another big manga/anime wise they could've did was Shonen Jump Vs Capcom. If that would've happen, sales would've went way WAYYY up when they released it on consoles.

I actually don't really know but I just never see any Sammy logos with ASW games anymore so I kinda thought they left each other. Maybe someone else could clear it up since I don't really know 100% of the situation.

Cap, Cap, CAPCOM!
They've beaten up Marvel, SNK and Namco
And you ask who is next to go?
GATCHAMAN!

SF4 is coming soon, Street Fighter is back!
Science Ninja, what the hell is that?
Fly! Fly away GATCHAMAN!
Go! Go away GATCHAMAN!
THERE ARE MULTIPLE EARTHS!
THERE ARE MULTIPLE EARTHS!
OOOOOOOOH GATCHAMAN! GATCHAMAAAAAAAAAAAN!

http://www.youtube.com/watch?v=tjuN5Bn-RCo
http://www.chronicsite.com/gatchaman/opening.html