Here is a way to put the 'Mini-Masters' into the MOTUC Canon...
An alien race of shape shifting, telepathic blob beings from a dying planet crash lands on Eternia after being blown out of space by The Horde. While on Earth, they must adapt in order to survive, so each of the tiny blob aliens takes the shape of a character on Eternia...hence the Mini-Masters are born.
The strange thing is that due to the mystical energies of Eternia, they also adopt a bit of their counterparts personalities as well.
^I know, it's basically a ripoff of transformers, but it's still a way to technically have the Mini-Masters running around in MOTUC continuity.