Yes, Sega considered him for Sonic Sega All Stars Racing for a Wii Exclusive character, just as Banjo/Kazooie were an exclusive character on XBox
but, they cut him out, as they thought it would ruin the sales of Mario & Sonic at the Olympic Winter Games, which was suprizingly far more popular than the original.
I think Diddy Kong would've been a good and equal counter to Banjo/Kazooie. They would finally appear in the same game since Diddy Kong Racing for N64, even though it wouldn't be side-by-side, it would still be a perfect counter-character, and Diddy hasn't competed in an Olympic Sport yet, because a Mii wore a monkey suit and stole his clothes while he was in the dressing room...
All jokes aside, it would be nice to see Diddy Kong in his one element that seperates him from Donkey Kong, racing alongside Sonic, besides, they did fight each other in Brawl. Who thinks that Diddy Kong, or Mario, Possibly Both, should be incorperated into a 3DS version of the game?