Jiggles is bottom tier, but not for the reasons you mentioned above; aside from her piss-poor weight, of course.
She does good damage, actually. Not heavy, but good. The damage she deals doesn't matter too much either, since she's a gimp character: you're not supposed to rack up damage and finish with a smash with her, you're supposed to wall people with her absurdly obnoxious and spammable aerials, until they fail to recover from knockback/really good off-stage play from the Jiggly player.
Nor does she need an Up-B for recovery with all the jumps and DI. :P It certainly would of been nice though, since sing is 99% useless.
Although yes, you're entirely right that she's a terrible character regardless of all that jazz. Her only real good moves are her aerials; which doesn't include her shitty d-air;, she's the lightest character in the game, and her reach is nothing special. No projectile either.
It is true she's rarely used, but mostly because she's a pink ball of fluff, not because she's bad. Every n00b and their brother think Peach is shit, and because they don't want to play a princess, she goes really unused too. Characters are underused generally because they're a bit more complicated to play well than the rest, and/or they're not appealing to the gamer.
And while I hate to say it (I'm not one to shut myself up about Brawl talk >_>), but this isn't the thread for that discussion either. :P We should be talkin' 'bout our first mains, eh?