You can't really use the "this character isn't in top 8" argument, because look at who was making top 8 at EVO this year. I don't think Reptile is a better character than Shinnok, but he's there (that's not downplaying, I promise...Reptile is a lot better than people make him out to be IMO). Also, where's Cassie, Jax, Sonya, etc? But you go to top 16, and there's two Bone Shapers...and then an Ermac and Mileena. This tournament had a ton of people who could take home the glory. It doesn't always pan out that way, though. Do tournament standings have anything to do with it? Yes. Does EVO also possess pretty much the most competition of any major tournament in the world, making it impossible to seed and place players in ways where they didn't run into another seeded player early on? You betcha.
That being said, Shinnok is a very powerful character, whether top 5 or top 10 or whatever.