Why should the Day 1 select screen be what you say it is?
In what rulebook is it written that a select screen must be canon in the sense that it represents the characters that appear in the story campaign precisely in the way they appear in it, but does not have to be canon in the sense that those characters don't need to ever exist in the same timeframe?
What I am asserting is that you have assumptions about what a select screen should be that don't come from anything in reality, they're just based on how MK has done things in the past. MKX exploited that tradition to create a plot twist. This is not a crime. It's not even wrong. It's simply a decision to do things differently this time from how they did things in the past, because the way they did things in the past was not "right" or "wrong," it just was.
The way they did it in MKX is not "right" or "wrong," either, it also, simply is.