This is an impressive project. There are so many niche little corners of the community that have come and gone that you probably have infinite material to work with, but some of what we know as "Mugen Lore" may not be as approachable to people who were not in said circles.
If you're looking for things that may be digestible to the wider public, I do have some suggestions. Apologies if some of these are already covered, the whole image wasn't loading for me, you know how the site errors have been lately. I'm going to try and avoid submitting any "lolcow" or "cringe" related subjects because I find it to be a mean spirited practice that only serves to detract from the actual interesting history of the engine. I'm also going to try and avoid things people have already suggested.
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-Club SynDicate/ClubSyn Xtreme: Old Mugen forum/website run by Syn. One of the earliest "alternative" communities that emphasized visual style and aesthetics. Much of the userbase specialized in graphic design and using Mugen to make cool looking characters and fights.
-Phantom Gs: Another older forum run by MOTVN and Hank Venture, was a private invite only forum with a focus on cultivating a community of artists. I seem to recall there was some drama over the exclusive nature of the forum and the content (mostly stages) shared on it, and that some of it might have been leaked. But it's been so long that I don't remember.
-Newage Mugen: Don't know much about this one but I think it was basically a middle ground of the above two? You'd have to ask someone who was there for it, I think it's after my time.
-JS Mugen and its offshoots: Another early "alternative" community, this time with a focus on Mugen from a fandom perspective as opposed to a developer one. Rather than creating their own characters or stages, users of this forum would make use of existing content to create videos either as a form of Lets Play or storytelling/roleplay. Probably the first community of its kind like this, eventually splintered off into many other smaller subcommunities. The origins of what was known, sometimes derisively, as the "Youtube Mugen Community."
-The great Japanese Mugen collapse: I don't believe a proper name was ever established for this, but the shutdown of Geocities, Yahoo Japan and InfoSeek (and probably some other hosts I've forgotten) resulted in many, many, many, MANY Japanese Mugen creators losing their hosting. I seriously cannot emphasize enough how scary this was at the time, because the Japanese community hadn't really adopted file sharing sites for their content the way we did in the West. Some of them did eventually start using things like OneDrive and other uploading services (and still do to this day) but many others would be lost if not for the Wayback Machine and people having already downloaded their content. We narrowly avoided a digital Library of Alexandria burning.
-CvS Big Boss: You know Kabao, the spriter who drew Yoko for Warusaki to code? On his old website, he shared some animations he'd drawn of Big Boss aka Naked Snake from Metal Gear Solid 3. I believe this was meant to be their next collaboration after Yoko, but nothing ever came of it.
-Dante by Nestor: This was a WIP for the Capcom full game that Nestor was creating, you may recall some of his releases like Viewtiful Joe and Chris Redfield. I actually created some palettes for it, but as far as I know the character did not get far into the spriting process. I don't know if enough progress was made on this for it to count, though.
-John Cena by SeanAltly: After the "Best in the World" update for his CM Punk, SeanAltly teased creating a John Cena character to go along with him. While he was developing Capcom vs the World he ran two polls to determine the final additions to both sides of the roster. As I recall, John Cena narrowly lost to Axl Stone from Streets of Rage. I am not sure if anything ever happened after that, you'd have to ask him.
-Yamakichi's WIPs: Yamakichi, who you may know as the creator of FF7 characters and the host for Jinmen by Souken (more on him later), was working on a Kamen Rider Skull character before disappearing. You can still find video footage of him on Yamakichi's Youtube channel, and images on the archived version of his website. I also heard rumors that he was working on Sephiroth, which would be a logical conclusion given he made Cloud and Tifa, however I can find no concrete evidence of this so take it with a grain of salt.
-Air Orochinagi: When Vans released his old Kyo Kusanagi, he decided to have some fun by giving him an air version of Orochinagi just to spice things up a bit. A few years later, King of Fighters XIII was revealed and lo and behold, Kyo now officially has an aerial Orochinagi.
-Electrocaid's Perfect Select: An archivist project meant to catalogue what a "complete" select.DEF containing every known released character would look like.
-Animation classifiers: Okay, this one's going to take some explanation. You know how in CvS2 Vega/Claw has an intro against "ugly" characters where he shakes his head in disgust, and against women where he tosses a rose and bows? Well, back in the day some creators tried to create a standard for things like this that wouldn't require maintaining a long list of name triggers. This was done by including blank animations in the character's AIR file corresponding to things like ugly, female, etc, and having other characters trigger their animations based on these values existing in their opponent's AIR file. This fell out of practice, but I think the very oldest versions of POTS's WinMugen characters might have them. If you have any characters released by the Western community that date back before roughly 2009, you can probably find them.
-Magneto, Cyclops and Psylocke edits: Since you mentioned Urien headswaps this came to mind. In short, these three characters tended to be the basis for a lot of early comic characters' sprites, since they were easily edited to resemble characters with similar costumes.
-Souken: A Japanese creator known for their custom sprited characters that would look cute or silly on the surface but had intense gore, body horror and surreal imagery in game. I don't think they ever caught mainstream attention but they were actually super controversial among people that knew of their work. I think nowadays they'd be more appreciated by people with the stomach for horror, or at least respected for the artistry in their sprite/animation work, especially after the popularity of creepypastas with gen Z. I believe Souken returned right before the pandemic with a new release, actually.
-Battle Craze: An original game developed for Ikemen, has already developed a solid cult following.
-Mugen character sprites in Death Battle: If you're familiar with the web show Death Battle, many of their older episodes would use sprites created for and directly ripped from Mugen characters in their animations. I believe they were uncredit at first, but after a visit to this very forum (they have an account here, actually) they ensured to give credit to the artists responsible for the sprites used in every video.
-French Bread C&Ds: French Bread, the developers behind Melty Blood and Under Night Inbirth, are notoriously very strict on any projects that use their assets. This can be anything from mods of their games, sites displaying frame data and yes, even Mugen works. There was a period of time when several Mugen creators would receive cease and desist requests to stop hosting their content. I believe this is why 9 went on hiatus for so long.
-Interplay C&D: Similar to the above, Interplay sent Basara a cease and desist while he was working on his Clayfighter project for Mugen. This one's particularly egregious if you're familiar with the company's history in recent years, and obviously the dormant state of the IP.
Good luck on the iceberg. If I think of any others I'll post them here, I look forward to seeing what shows up on it.
