Yes, it was the only way to do the weird optimizations and tricks needed to make a cutting edge real time game like Mario.
Even in the '90s developers embedded assembly in the performance critical areas of C code.
My understanding is NES games were in pure assembly (specifically 6502), no C at all.
Yes. There may have been _some_ 8-bit or 16-bit games that were written in C for mainstream consoles but it wasn't until the 32-bit consoles (Playstation, Saturn, etc) that it was really practical to do so.