Regarding Sho on the P4 side, it\'s worth noting that when Mitsuru reminds Yu that Sho is a criminal and that, as tragic as his circumstances may be, he must be captured, Yu doesn\'t give much of a rebuttal, even if he still wants to save Sho. Given his reaction, I suspect that Mitsuru isn\'t necessarily meant to be seen as wrong or even a Jerkass Has a Point- it\'s more a testament to how much of an All-Loving Hero Yu is. Perhaps sympathizing with Sho is meant to be something of a hard sell, but also one that might eventually pay off.
Incidentally, while you\'ve made it clear that you\'d rather not have the P4 route be canon, does it matter at this point? There don\'t seem to be any sequels coming out(like you said, it seems to conclude Persona 3 and 4\'s storylines), Dancing All Night doesn\'t really reference either Arena game, and Atlus seems to be moving on to Persona 5.
It\'s been a while since I played the P4 story so I\'m not in much of a state to reply to this, but that is a good point. Though a lot of fans find Yu\'s All-Loving Hero tenancies pretty annoying sometimes, especially in this game where they\'re played up a lot more than usual.
I personally don\'t find Sho quite as Unintentionally Unsympathetic as most people do (though I feel he\'s supposed to be more of a \"villain who has understandable reasons for ending up the way he did\", rather than a Woobie or something), but I do feel like the P3 route handled him better.
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Story Review
Note: I suck horribly at fighting games, so I have no right to review the gameplay of this one.
Persona 4 Arena Ultimax is not only the continued story of the first Arena, but also a sort of Grand Finale to both the P3 and P4 storylines and characters. So how does it hold up?
Well, firstly, when I played the P4 story, I was very disappointed. The plot is pretty much your bog-standard Tournament Arc, with a villain who tries but fails to elicit sympathy, and a Big Bad who suffers from "King Sombra Syndrome" ( Generic Doomsday Villain who does a lot of plot-affecting things off-screen but when actually fought, he's killed pretty anticlimactically.) But really, the only reason I bothered with the P4 story in the first place was to unlock the P3 one. Being a fan of P3 more than 4, I was eager to see all the characters from that game finally return. So, I get to the P3 story and...
To my surprise, I find a VASTLY better-handled plot. And I don't want to sound like I'm biased here: this isn't because I'm more a fan of P3 than P4, it's because I genuinely feel the story is better-written on this route. Instead of just being "go here, fight this Shadow, keep going, repeat", there's an actual plot. It has development, mystery, tension, and gives everyone a chance to shine, even a certain Enemy Without that isn't seen AT ALL in the P4 side...
Sho's character is a HUGE improvement over the P4 story. He actually gets enough screentime to fully establish his motives. His flimsy excuses ARE called out as such. His past with Ikutsuki gets explored (Ikutsuki as a villain in P3 was severely underused, I'm glad he gets more fleshed-out posthumously), and the reasons for Minazuki existing are explained. He's developed via Not So Different comparison with Labrys, and he comes off as less of a Karma Houdini in the end.
We actually get to see what happens while the shadows are flooding the tower, with characters rushing to rescue those still in the town, and the subplots never feel like they're in the way. And I really like what they did with Ken. Before, I could kinda see why he was hated. Now, he's one of my favourite characters, due to the interesting Deconstruction of the Adorably Precocious Child and Kid Hero tropes.
It still has its flaws, which I don't have time for here. Unfortunately, it seems like the P4 route is canon.