The Mario RPGs are canon. Miyamoto himself confirmed it in an interview.

This also applies to the various morons I've seen who say that Super Smash Bros is canon as well. (It isn't. Smash Bros is it's own separate thing. Sakurai himself even confirmed that it's not canon to any of the franchises/series represented in it.)

Smash bros 64 confirms this even further by showing that it's just a bunch of toys come to life