I've always hoped a full fledged Touhoufied SSB would be released one day. The ideas so far are awesome. I however don't agree with some of the groups. Some of the groups are based on only their race and/or the game they debuted in, with the characters listed in them hardly having a connection to each other. It is like grouping Bowser, Dedede and Wario together as the 'Fat Guys' instead of putting Bowser and Wario in the Mario group and Dedede in the Kirby group. It would make more sense to group characters together that have an actual social connection or live in the same place (So Sakuya should be coupled with Scarlet group and Sanae with Faith group). I do however agree with the unlockable character line-up. These are my suggestions for the groups, along with a symbol for them (all Smashers have a group symbol after all):
Hakurei (Yin-Yang symbol): Reimu, Suika, Ruukoto, Mima.
Moriya (Snake & Frog symbol): Sanae, Kanako, Suwako.
Myouren (Byakuren lotus option symbol): Byakuren, Nue.
Magic Forest (Mini-Hakkero symbol): Marisa, Alice.
Misty Lake/Fairies (Circle nine symbol): Cirno.
Youkai Mountain (Maple leaf symbol): Nitori, Aya.
SDM (Vampire bat symbol): Sakuya, Meiling, Patchouli, Remilia, Flandre.
Eientei/Bamboo Forest (Crescent moon symbol): Reisen, Eirin, Kaguya, Keine, Mokou.
Garden of the Sun (Sunflower symbol): Yuuka.
Hakugyokurou (Cherry blossom symbol): Youmu, Yuyuko, Yukari.
Sanzu River (Reaper scythe symbol): Komachi, Shikieiki.
Heaven (Keystone symbol): Iku, Tenshi.
Underground (Radiation warning symbol): Yuugi/Orin, Satori, Utsuho, Koishi.
Tech (Wrench symbol): Rika, Yumemi.
Makai (Shinki wings symbol): Young Alice, Shinki.
GOD (A beer mug): ZUN.
EDIT: List updated.