Straight from GameFAQs.com: To unlock Mr. Game & Watch, you must complete both Classic and Adventure 1-P mode or the Target Test with ALL characters at any difficulty/stock, regular and hidden (that includes Mewtwo). After you do that, you'll be challenged; win this battle and you can play as Mr. Game & Watch! Alternately, play Vs. Mode more than 1000 times.
And there you are, it's easier to beat Classic,Adventure, and Target Test, with all characters, then to play vs. mode 1000 times. 😄