Cyberspace is a massive boon to the Eggman Empire, simply on the raw fact Sage can essentially seal almost all of the Koopa Kingdom into it and essentially cause a massive game over for most the fighters. Especially since a lot of the ways people think the Koopa Kingdom could survive simply wouldn't work. For example, King Boo's Dimensional Travel likely won’t be effective, because the transport that forces you into Cyberspace isn’t
just some ordinary Dimensional Travel anyone can use. It’s travel that specifically
defies Laws, causing “logical disparities” and “drags them down to the bottom of causality.” In fact, when Sonic attempts to defy his Cyber Corruption, Sage verbatim doubles down on this and says to do this Sonic must be trying to
transcend causality. It’s a bit more unique than the average portal or teleport, (especially since Dimensional Travel in Sonic exists and doesn't do this, see Chaos Control and Warp Rings), so it's likely not something he could evade unless his own DT specifically showed these properties.
Better still, it
traps you between dimensions. Hard to travel between them if you’re
stuck in their middle. And even if they escape, it shouldn't matter, because that leads into the
corruption, which causes mutations and in digitiation
limits (certain) abilities. This corruption also
traps your soul instead of your physical form. So the Boos would be kept out of the picture regardless if they were trapped in Cyberspace, because they are literally ghosts who would have their souls (ie their literal forms as they are materialied/undead spirits AKA souls).
This also means that a lot of the Koopa Troop simply
could not do anything, since most can't travel dimensions regardless.