Originally posted by General Kaliero
No. It's not. Sakurai specifically stated how it works, and it's like Zelda/Shiek: Down Special. They're traded out in the set order of Squirtle-Ivysaur-Charizard. They share the damage meter, but they also have a stamina stat, meaning that you have to swap them out regularly or they'll be too tired to fight well.
Where did you hear that from? Smash Dojo didn't mention anything about how they battle so a link would be cool.