The concept of the whole is almost a Throw the Dog a Bone for the C-list Nintendo-characters, at least for some. The idea is to help them realise their dreams again, and get them out of the island to continue on their life instead of living as the forgotten hero. This seems to apply especially to Little Mac as his game PunchOut!! Wii came out one year after, and to some degree, Takamaru in Samurai Warriors 3.
It becomes even better when Little Mac became a fighter in Super Smash Bros. 4, which is not only possibly the highest honor a Nintendo character can receive, but also probably one of the highest honors in gaming. Mac certainly has made his comeback.
The Good Ending: Nick sacrifices himself for Hikari by knocking her out, putting her into Kirarin and let it fly away while he sternly looks at the sky. He had to make those obscure Nintendo-characters realize their dreams and wishes, the reason why they came in Mimin Island in the first place. And indeed, helping them out instead of himself to the point of sacrificing for better future of the former heroes, it is heroic.
Luckily, the bracelet the old Mimin gave to him saves the island from collapsing and makes Shadows vanish away. Nick's then seen on the shore, all alone, only with the Mimin at his side. It would've stayed like that... until all the characters he had helped appear right near him. Just look at them chatter at him. Nick's of course surprised.
That makes Nick/Captain Rainbow one of the most overlooked heroes of Nintendo today, yet still a hero for those few resurfacing obscure Nintendo-characters, such as Little Mac. Surely, he'll shine ever brighter, even when none will remember him in the same ironic vein as the ones he went to help.