I think you're still missing one crucial detail of how the ultra selection rule works:
The loser still gets final say in the counterpick because after both characters are selected, the winner *has* to select the style they are going to use FIRST and the loser is then allowed to counterpick it, and they can only change variations at all if the opponent changes characters.
I know the rule. I played 3s (well, 2i but same principle) competitively. But again, adding a blind stipulation doesn't actually change anything. You've just forced me as the winner to guess, and guessing is dumb. Guessing wastes time. If I have to play "guess the counterpick", I'm just going to pick the option that worked last time, and pray you don't have a counter pick. Because either I already know you don't have an answer for it (because you didn't lead off with it), or I don't want to take the risk that you have an answer for my alternative choice (because it wasn't the choice I led off with).
As far as the "why" goes, I would be curious to ask what the logic behind ultra select is in the capcom community, but in this case it sounds like an interesting way to take advantage of the unique design of the game and its balancing structure.
Your scenario that you describe at the end is plausible but its also worst case. I think its also possible that it would promote character variety and evolve the meta in an interesting way because it might make finding a hard counter to a character much more difficult since you have to be thinking about countering their entire toolset.
The "why" in capcom games is simple. Its allowed because it doesn't matter. Same with every switch thats ever been allowed in every fighter ever. If the winner switching "something" is harmless, it is allowed. Wether it be costumes / aesthetics, or relatively minor / situational gameplay changes. As long as its harmless, its allowed. In the case of SF4, the chance of the selected ultra being the deciding factor in a match is so small in comparison to all the other variables who cares if I change it. Yes, some are more helpful than others in certain match ups. But just selecting Zangief's U2 isn't as big a deal as picking Zangief instead of, I dunno, Hakan. Picking U2 isn't going to guarantee I even get to use it, because you may know all about it and just never let it happen, or you just lose before I ever earn it. Perhaps, if every ultra was a beautiful snowflake with distinct gameplay roles, but that's not the way it works in SF4 (or any game thats ever tried it or ever will). Why?
a) most characters don't have two useful ultras. One of them is usually FAR and away better than the other, either by virtue of combo/setup ability (Yun U1) or by covering a hole in their gameplan (Dhalsim U1), leaving the other choice as either a novelty (Ryu's U2) or very very very specific matchup tool (Fei's U2). Thus, if I play Fei, the odds are ALWAYS in my favor to go U1, regardless of who you pick and what Ultra you select. Maybe you and I are super evenly matched, and you play Viper and U2 is literally the only weapon I have to turn the tables, but this scenario is SO rare its not even worth banking on. Not for most of the cast.
b) almost no matchups are decided by your ultra v y ultra, so who cares who picks first. What matters is what character you picked, which happens BEFORE I pick my ultra. As a Dan player my U1 has one use. Fireball reads. I read a fireball, you dun fucked up. But if you pick anybody with a shit fireball game, I go Ultra 2. No debate. Even if you don't. Even if you pick Ryu. I know that you know that I know what my U1 does. So picking U1 is effectively calling my shot. Its resting my entire precious ultra bar on you throwing a bad fireball. Why would choose that instead of U2, which adds a couple hundred damage to almost any corner touch?
c) most players only have 1 or 2 mains. In a fantasy world, every player would be PL or Infilitration and have 4 - 5 pocket characters. But we don't. When Daigo walks up to the sticks, I already know who he is going to pick (within a reasonable margin). Even if I don't, when I see you in my pool, I'm going to research you and find out. Okay, does this guy use my U1 characters or U2 characters. And like point b, you probably already know me too. If you don't open with your counter pick, I could maybe assume its coming and do a quick switch, but then whats stopping you from jumping right back to the same character when I can afford to drop this game and then pull the same shit to you in a match?
d) I already beat you once with what I picked the first time. Even with the loser blind pick random hooey rule, we still start off with the fact that I beat you with one gameplan. I'm going to need a STRONG reason to change it. My motivations can only be a guaranteed counter pick (which blind rules destroy) or because it was super close or I'm bored or something else that I absolutely cannot bank on, any other time, my gut instinct (as the winner) is to just repick what worked and see what you come up with.
But again, these are all reasons why nobody gives a shit if you repick your ultra after a win and compared to losing a teleport or gaining a command grab is almost nothing. Ultra combos give SF4 characters 1 (maybe 2 in a close match) opportunities to use a projectile, counter, anti air, grab, whatever, that they otherwise might not have. Dhalsim gets one get off me, Juri gets one custom combo, ryu gets one free 300+ damage uppercut, etc. If the difference between Ken's U1 and U2 was a different as the dif between say, picking Ryu or Ken no toournament would run that way. Variations give MKX characters that kind of variety. It turns a character who could previously zone into one with grabs, or one with low damage mixups into one with high damage bnbs. Allowing variation select is not only going to waste time, its going to slow meta development WAY down because nobody is going to drill down an actual matchup when there's 9 possible ways the matchup can go.
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