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Love how Hoshoryu counters grips he doesn't like with moves like this overhook throw-by and elbow prop.

Would a sumo wrestler who was seriously in shape do well?

But yeah skinny rikishi have been known to do well, despite their disadvantage. A Czech judoka who transitioned to sumo a decade or two ago is the skinny paragon to look up. Hoshoryu himself was recently leaner and it helped to plump up (maybe half muscle, tho).

But they seem tpo be carrying a lot of fat. That mass is presumably an essential advantage, but of that mass was muscle instead of fat, wouldn't they be stronger? I'm thinking of the body type of a modern heavyweight weight-lifter. But maybe a smaller muscle mass supplemented with fat is better?

These guys max out or exceed the natural limit of human muscle mass. The fat is useful in itself & allows them to eke out the last few kilos of muscle their bodies can sustain. Their shoulder girdles are less muscular than a superheavy powerlifter but not much. Legs, neck, & back are comparable.