Now that I think about it, I'm pretty sure he should technically still be a meat mallet! At the end of the PUZZLEVISION movie, Luigi is turned back into a meat mallet and used as a weapon against Mr.Puzzles and I don't recall him ever turning back. But the next video he was just Luigi again.
To me, this is just an opportunity for Revelations pt.2. I don't know how that would work, but this feels like something that could become lore. What if the smg also suggests that when he inevitably gets sued by Nintendo (for real, not the 2022 WOTFI), The copyrighted characters will be shot by Nintendo with an SMG in their goodbye video. I know it's a stretch, but if I were him, I would be prepared to kill off the characters in the most dope way possible!