When performed, Mario would take out and absorb the power of a Fire Flower, transforming him into Fire Mario. This would infusing his attacks with fire and making him stronger and faster. Fire Mario was one of the many Final Forms in the game, which meant that he had a different and more powerful moveset than normal Mario.
Standard: Turns into a referee from Punch Out!! and waves one of his arms.
Side: Same as standard.
Down: Same as standard.
Fire Mario is a form in the Mario series that Mario takes after obtaining a Fire Flower. Originating in the original Super Mario Bros., this form is the most common of all of Mario's powered-up forms throughout the series, appearing in almost every Mario game featuring power-ups. It most often recolors Mario's clothing to white with red overalls and gives him the power to shoot fireballs. Contrary to its use in SSF2, the form generally has little other use beyond this, though it does Mario strength, speed, and even flight in The Super Mario Bros. Super Show!.
Mario using the Fire Flower to transform into Fire Mario.
Prior to v0.5a of the SSF2 Demo, Fire Mario used a completely different sheet. His standard combo was a seven-hit beat-down and all of his special moves were completely different. The Super Fireball did not release the Mario Finale at full charge (though he released a mini-version of the attack), his side special move was the Heat Shield rather than the Golden Cape and his down special move was the Fire Mario Eruption rather than the Firewall Tornado.
Out of all of the removed content throughout the demos, Fire Mario has proven to be the most controversial. Fans commonly request his return, complaining that his absence detracts from SSF2's individual identity and makes it too much like a clone of Super Smash Bros. Brawl. Despite these complaints, the developers have stated that he will not be returning.