I really think people need to get past the need for everything to fit within a continuity/lore/timeline. It's massively tainting their view of things. An Easter egg is not Nintendo saying Zelda is part of Mario's world. It's a joke by the people who made and love both games.
Their reasoning for removing the Mario paintings makes sense. I don’t really like it when Nintendo games imply an interconnected universe outside of Smash, especially not Zelda. But replacing them with a tapestry that depicts the entire game’s story is objectively worse