Look, I know I'm going to get flack for this, but, yeah... I can see why they're doing what they are doing. When Skullgirls originally came out, the fascist designs had a pulp-like charm to them. The game was released in 2012. Obama was president and a lot of the country felt that things like racism were very much in the rear-view mirror. Including such designs at that time didn't really carry the weight that it does today. Just a few weeks ago, people with nazi flags were out in front of Disneyworld. Then there's the group of moms that want books banned quoting hitler in a newsletter of theirs. There's more, of course. Well, that's the climate of the world we are currently in and it is very different than the one that existed when Skulllgirls first released.
I know lots of people will say that this is just another way that liberal progressive woke PC values are affecting the games we play, but, IMO that's only half of the issue. Racist extremist voices have become a very real part of modern society and that reality makes what was, in the past, a fairly innocuous design choice into one that is now, retroactively, something that the devs are very much not okay with.
I don't necessarily think this is the right move, but I don't really fault them for it either. There's no real right move here if the devs are uncomfortable with the normalization of imagery that has, in time, become legitimately problematic.