For a universe in which anthropomorphic creatures can go on adventures, race against a space pig, and fight head to head with other anthropomorphic creatures and humans, It's Mr. Pants still manages to be one of the stranger titles of the DKU. It being a puzzle game (one that can drive you insane near the end) makes it even stranger. At first glance, It's Mr. Pants is a crudely-drawn stick figure man in a crudely-drawn world seen in the background of the puzzles he's crafted.
This, of course, has made new and old readers of the site ask the same question over the years: why in the hell is this game DKU? By the end of this, hopefully the answer makes sense. At the very least, hopefully it quells the demands for it to not be as if the game is the DKU equivalent of Hitler.
Before answering exactly why the game is DKU, let's look at the origins of the sexy pantalooned Adonis. You might want to consider making a drinking game out of how many times "Mr. Pants" will be written in this little article. Go on and get your drinks and Mario Party 7 shot glasses; I'll wait.
Mr. Pants  was, before Rare went down its Kinect and Avatar-filled road that shows no signs of wanting to stop any time soon, Rare's website mascot created by Leigh Loveday. As the story goes, Loveday, also responsible for writing the manuals (including stories) of a few DKU titles like Donkey Kong Country 2, Diddy Kong Racing, and more recently, Nuts & Bolts, wanted a render for Rare's website. Since the developers were too busy making games, Loveday took it upon himself to fill in the missing graphic. Lo and behold, Mr. Pants  was born. Throughout the years, he was the subject of many past Scribes, had his own survey section in the early years of Rare's site, and was in charge of the seldomly updated Pantsboard when Rare was acquired by Microsoft.
Before It's Mr. Pants, he also made appearances, both physical and not, in Jet Force Gemini, Banjo-Tooie, and Grabbed by the Ghoulies.
Now, it's explanation time.
Mr. Pants'  first appearance was in Jet Force Gemini, a game that isn't DKU. This would, by default, disqualify It's Mr. Pants from being DKU at first glance. However, his appearance in Jet Force Gemini was by way of a cheat code called "Ants into Pants." Ants into Pants, as the title says, turns the Drones from the game into Mr. Pants , allowing your twisted fantasies to shoot Rare's mascot (and potentially anyone that's associated with said mascot. Ahem) to come true in blood-spattering glory. There are two reasons that this appearance of Mr. Pants  doesn't count:
-Mr. Pants  is obtainable only by cheat code. You have to fulfill optional conditions to get the character in the game. Which brings me to the second reason...
With Jet Force Gemini explained, that leaves us with Banjo-Tooie, which is the game that explains why It's Mr. Pants is DKU, but not fully.
As you can see thanks to Chad's Pantswatch, Mr. Pants  makes a few appearances in the game: one by way of constellation, and one by way of TV. The TV, despite his two frames of animation, is one of the two reasons that the game gives us to consider Mr. Pants  an actual living being. He moves and everything!
The second reason gives credence to the first reason. As anyone who has seen the credits to Tooie can testify, the developers are listed by their first and last name, with their nickname coming from one of the many characters in the game. That proves to be an interesting fact, because Leigh Loveday's nickname is "Mr. Pants." 
It then becomes a simple case of an if-then statement: if the other nicknames are characters in the game, then it only makes sense that the Banjo Team considered Mr. Pants  to be a living character, too. Otherwise, why single out Loveday by giving him a nickname of something that isn't a character? Why not just give him "Penis in Terrydactyland" as a nickname* instead? The game got away with a lot of innuendos to begin with, anyway.
When It's Mr. Pants was released, this was all we had to go by regarding its DKU status. It wasn't until 2006's Viva Pinata that gave the circumstantial coup de grāce to confirm once and for all if Mr. Pants  is either two frames of animation, or a genuine, living stick figure.
In Viva Pinata, you can end up buying Mr. Pants'  Hat for your pinatas. Its description is, and I quote:
"Not just a legend on Pinata Island, but also one of Pinata Central's best customers due to his party-hard lifestyle. This hat symbolises everything that is right in the world."
Two frames of animation can't be a best customer (or even a customer to begin with). However, an actual character can. While the quote alone doesn't make It's Mr. Pants DKU (remember, it's by way of a physical appearance), it reinforces what Banjo-Tooie established 6 years before Viva Pinata.
This concludes our little featurette. No matter how badly some may want It's Mr. Pants out of the DKU, there's enough evidence to prove its inclusion. Hopefully you've either learned a bit of useless trivia to impress absolutely no one with, or you're holding on to sobriety for dear life.
*With apologies to Mr. Loveday.