Would anyone be aware of this game or it's content without Mario in it? Would anyone play it? Would people write it off even if they DID play it because the characters were forgettable or generic?
I don't think the creators chose Mario specifically to get more eyes on the game, but just like Mad Father and The Witch's House, the main two inspirations for this game, the innocence in these little girls, or in this case, our cute Mario, is meant to disarm you when the real horror jumps into view.
You mention Luigi's Mansion, and that is a great example of how the Mario characters can work in so many settings. Mario & Luigi, Mario Kart, Puzzle & Dragons, and Mario + Rabbids all show the versatility of these characters working in so many moods and tones. Can Mario work in a darker, more mature context? Absolutely! All 3 Paper Mario games have dark areas, ghosts, heartbreak and more that are creepy and downright scary in lovely ways! A town transformed into pigs, the video game equivalent of Hell, a world being eaten alive!
Why was Mario chosen? Because he's comfortable. Generic. One of the author's comfort characters, to be precise. We know him well enough to have a point of reference that can be used to descend into surprising maturity and violence. I think it works! Like, analytically. Subjectively will be different for everyone, but like I said, we wouldn't be here without Mario to thank!